The peso broke past its resistance level yesterday, closing at a six and a half year-high of 46.31 to a dollar as remittances from overseas Filipino workers (OFWs) started to peak helped along by foreign portfolio investments.
The peso closed at its intra-day high, with total volume reaching nearly a billion dollars at $971.85 million at the Philippine Dealing System (PDS).
The peso opened strong at 46.530 before hitting a high of 46.310 and a low of 46.570 to the dollar. Yesterday’s close was the highest since the peso last touched the 46.30-to-$1 level on Oct. 2, 2000.
The strength of the peso surprised the market which had expected a correction after Standard & Poors announced that it is keeping all the country’s credit ratings at present levels despite expectations of an upgrade in outlook.
Instead of weakening, the peso opened strong and never looked back throughout the session, also supported by the rally at the Philippine Stock Exchange which catapulted the index to a new all-time high.
“There’s a lot of hot money going into stocks, helped by positive investors sentiment on the Philippines,” said Roberto Vergara, head of treasurers at Land Bank of the Philippines.
The Bangko Sentral ng Pilipinas (BSP) said the peso picked up its strength from strong OFW inflows coming ahead of the reopening of classes in June.
BSP Deputy Governor Diwa Guinigundo said investment inflows are also strong, flowing into the equities market, money market and direct investments.
“These followed good news on inflation, the conduct of the election, our good international reserves and improvements in the banking sector,” Guinigundo said.