Despite the pandemic and global economic contraction, strong macroeconomic fundamentals continue to support the country’s favorable financial footing, the Department of Finance (DOF) said.
The DOF said in its economic bulletin yesterday the Philippine peso remains one of the most stable Asian currencies amid rising risks.
The peso-dollar exchange rate remained stable in 2020, its coefficient of variation at 2.11 percent, in the middle of the pack of 12 regional currencies and an improvement against the 2.24 percent Asian average, the DOF said.
“The main reasons for the peso’s continued strength and stability are the country’s strong balance-of-payments (BOP) position and rising Gross International Reserves (GIR),” it said.
The country generated a BOP surplus of $12.8 billion in 2020, equivalent to 3.5 percent of gross domestic product and the highest since 2010, which the DOF said was helped by slower imports and outward payments.
“The BOP surplus in 2020 was the highest in recent history,” the DOF said.
“Manageable budget deficits and prompt adjustment of monetary settings in response to current developments help maintain investor confidence,” it added.
The GIR rose to $109.8 billion in end-2020, up 21.6 percent from $87.84 billion the year before.
As a ratio of imports of goods and services, it rose to 11.7 months from 7.7 months in 2019.
These in turn boosted the confidence in the Philippine peso, the DOF said.