THE Philippine peso has emerged as the second strongest currency in Asia as of last month, the Department of Finance (DoF) reported on Monday.
In an economic bulletin, the Finance department said the local currency appreciated by 2.82 percent against the US dollar year-to-date. It ranked next to the Thai baht, which appreciated by 4.27 percent.
The local currency was followed by the Indonesian rupiah, which appreciated by 2.69 percent; Indian rupee, 1.06 percent; Japanese yen, 0.93 percent; Malaysian ringgit, 0.34 percent; and Hong Kong dollar, 0.21 percent.
In contrast, the South Korean won, Taiwanese dollar, Singaporean dollar, Vietnamese dong and Chinese yuan, depreciated by 6.65 percent, 1.75 percent, 0.42 percent, 0.16 percent and 0.02 percent, respectively.
“The peso-dollar exchange rate also remains stable throughout the period, its coefficient of variation at 0.82 percent ranking sixth among 12 regional currencies and lower than the 0.93 percent Asian average,” the Finance department said.
The country’s strong balance of payments (BoP) position and rising gross international reserves (GIR) are the main reasons for the peso’s growing strength and stability, according to the DoF.
“Strong foreign exchange inflows from exports of services, remittances, income from investments abroad, direct foreign investments and foreign borrowing all contributed to the strong BoP position,” it said.
The department explained that the exchange rate adjusted for the gross domestic product (GDP) price deflator was significantly correlated to the size of the payments balance surplus relative to GDP and the size of the GIR relative to imports of goods and services.
BoP surplus reached $4.788 billion in January to June, erasing the $3.257-billion shortfall in the same period last year.
GIR, on the other hand, surged to $85.379 billion as of June, 10.1 percent higher than the year-ago amount. It was enough to cover 7.4 months worth of imports, and also equivalent to 5.1 times the country’s short-term external obligations due within one year and 3.7 times based on residual maturity.
“These, in turn, boosted the confidence in the Philippine peso,” the department said.