The Department of Finance (DoF) said despite the strengthening of the US dollar, the Philippine peso has emerged as one of Asia's more stable currencies in the first five months of this year.
The DoF reported in its most recent economic bulletin released over the weekend that the volatility, as estimated by the coefficient of variation, of the peso-dollar rate for the month of June increased to 0.94 from the 0.82 registered in May.
The US Federal Reserves' indication to start "talking about" a taper, that is, cutting its purchases of government bonds and mortgage-backed securities, may be to blame for the rise in volatility, it added.
"This increase in volatility may be traced to the Fed's indication to start "talking about talking" about a taper, that is, reducing its purchase of government bonds and mortgage-backed securities," the Finance department underscored.
Like other currencies in the region, the DoF said the local currency also weakened by 1.05 percent vis-à-vis the dollar as of the first semester of 2021.
Despite this, it underscored that the peso is "one of the four strongest among 11 Asian currencies."
During the period, the Finance department said among the Asian currencies that depreciated worst than the Philippines is Chinese yuan, 1.15 percent; Indonesian rupiah, 2.82 percent; Japanese yen, 6.12 percent; Korean won, 3.18 percent; Malaysian ringgit, 2.47 percent, and Thai baht, 5.87 percent.
The peso joined Bruneian dollar, Indian rupee, and Vietnamess dong with having the least depreciation of 1.12 percent, 0.72 percent and 0.30 percent, respectively.
"Strong fundamentals support the relative stability of the peso," the DoF highlighted.
As of end-May, for instance, it said the country's gross international reserves of $107.25 billion could cover more than a year's worth of imports.
Furthermore, the country's exposure to external debt, measured in percent to gross domestic product, is the lowest among major Southeast Asian economies.
"Prudent macroeconomic management, containing the spread of the virus and ramping up the vaccination program, and safely reopening the economy will be important in maintaining investor confidence in the country during this time of pandemic," the Finance department concluded.