Peso stable amid COVID-19

The Philippine peso has ranked first among four Asian currencies that maintained their value against the US dollar in the midst of the COVID-19 pandemic.

Finance Undersecretary and Chief Economist Gil S. Beltran said in a bulletin the Philippine peso remains one of the most stable Asian currencies, appreciating by 2.21% relative to the US dollar as of July 8 when it closed at P49.53:$1 from P50.66:$1 at end of 2019.

In contrast, the Hong Kong dollar, Taiwan dollar and Japanese yen appreciated by 2.07%, 1.68% and 0.87%, respectively.

The peso-dollar exchange rate remained stable this year as it placed third among 12 regional currencies and posted a coefficient of variation at 0.73%, lower than the Asian average of 1.86%.

Beltran attributed the peso’s strength and stability to the country’s strong balance of payments (BoP) position and the rising Gross International Reserves (GIR).

The Department of Finance said the BOP surplus continued through May this year coming from a seven-year high last year.

From January to May 2020, the country generated a BoP surplus of $3.688 billion buoyed by slower imports and outward payments amid shrinking foreign demand.

The country had a BoP surplus of $7.844 billion in 2019, 2.2% of GDP, highest since 2012.

The GIR increased by 9.3% year-on-year to $93.3 billion in May from $85.4 billion in May 2019, which is equivalent to 8.4 months’ worth of the Philippines’ imports of goods and payments of services and primary income, up from 7.4 months as of May 2019.

Beltran is optimistic the country’s strong macroeconomic fundamentals will support the country’s favorable financial footing despite the pandemic and global economic contraction.

Investor confidence in the country will also be maintained as long as budget deficits remain manageable and monetary settings are promptly adjusted in response to current developments, he said.