The Philippine peso remains one of the most stable Asian currencies despite rising risks in the global economy amid the coronavirus disease 2019 (COVID-19) pandemic, the Department of Finance (DOF) said.
The DOF said in its economic bulletin yesterday even with the pandemic and global economic contraction, strong macroeconomic fundamentals support the country’s favorable financial footing.
“Despite the rising risks in the global economy, heightened by the spread of COVID-19, the collapse of global markets, the extreme volatility in currencies and the downgrading of credit ratings of many economies, the Philippine peso remained firm, appreciating from year-end 2019 level,” the DOF said.
“Manageable budget deficits and prompt adjustment of monetary settings in response to current developments help maintain investor confidence,” it added.
The agency pointed out as of July 8, the Philippine peso ranked first, year-to-date, among the four currencies in Asia that maintained their value against the US dollar.
“During the year, the peso appreciated by 2.21 percent relative to the US dollar, ranking first among Asian currencies including the Hongkong dollar, Taiwan dollar and Japanese yen which appreciated by 2.07 percent, 1.68 percent and 0.87 percent, respectively,” the DOF said.
The agency said the peso-dollar exchange rate also remains stable in 2020, its coefficient of variation at 0.73 percent, ranking third among 12 regional currencies and lower than the 1.86 percent Asian average.
“The main reasons for the peso’s growing strength and stability are the country’s strong balance-of-payments (BOP) position and rising gross international reserves (GIR),” the DOF said.
The country generated a BOP surplus of $3.688 billion during the first five months of the year, helped by slower imports and outward payments amid shrinking foreign demand, the agency said.
The GIR rose to $93.3 billion in end-May, up 9.3 percent from $85.4 billion the year before.
“As a percent of imports of goods and services, it rose to 8.4 months from 7.4 months in May 2019. These in turn boosted the confidence in the Philippine peso,” the DOF said.
