The Philippine peso returned to the P43 to a dollar level on the closing of the Tuesday foreign exchange trading.
The local currency finished P43.83 per dollar, appreciating 41 centavos from the P44.24 level on Monday’s close.
Jonathan Ravelas, chief market strategist at Banco de Oro, said that less volatility in the market can be attributed to the appreciating peso.
However, he noted that the local currency remains weak because of the outflows of foreign portfolio investment also known as “hot money.”
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that hot money continued to flow out of the Philippines, registering a net outflow of $115 million in the weekend ending August 23.
“Support lies at the P43.80 to P43.90 levels. Near-term bias still focused on test toward the P44 to P44.50 levels,” Ravelas noted.
In a recent statement, BSP Deputy Governor Diwa Guinigundo said that the peso has averaged P41.50 to a dollar since the start of 2013.
He added that the local currency remain well within the government’s full-year assumption of P41 to P43 to a dollar level.
Meanwhile, a local think tank said that external risks would still have an impact to the exchange rate.
“The exchange rate is likely to remain hostage to international developments especially that of the United States,” the First Metro Investments Corp. and the University of Asia and the Pacific stated.