Peso improves to 50.795:$1

The peso headed yesterday for its second straight monthly gain as the economy grew at the fastest pace in a year in the second quarter.

At the Philippine Dealing System (PDS), the peso gained by another 15 centavos to settle at a new four-year high of 50.795 from Wednesday’s close of 50.945 to the dollar. Yesterday’s close was the highest since the peso last touched the 50.660 level on July 25, 2002.

The economy expanded by 5.5 percent in the second quarter, bringing the first half growth to 5.6 percent.

Accelerating growth stokes investor optimism and may spur demand for the peso as foreign investments climb, analysts said.

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said the peso is being driven purely by the country’s economic fundamentals.

"OFW inflows are strong, as well as investments, our economy is growing," Tetangco said. "Given all these factors, it’s obvious for the peso to strengthen.

We’re just watching the volatility band to make sure that the maket is doing this in an orderly fashion."

BSP Deputy Governor Diwa Guinigundo added that considering the strength of OFW inflows this year, it was not far-fetched for the peso to sustain its strength.

"Once you get the continuing flows coming from OFWs then you will be convinced that the strong peso maybe sustained," Guinigundo told reporters.

According to an analyst, on the other hand, the peso is still packing up momentum and likely to go up further especially since the "usual factors" that hold it back are not present, such as socio-political turmoil and geo-political unrest in other parts of the world.

"There is increased confidence about the overall economy in the Philippines,’’ said David Mann, a foreign-exchange strategist at Standard Chartered Bank Plc in Hong Kong. "Investors still have a strong appetite for the peso.’’

The peso gained 1.3 percent against the dollar this month, according to the Bankers Association of the Philippines, after a three percent increase in July.