MANILA, Philippines - The peso broke yesterday into the 46 to $1 territory after the International Monetary Fund (IMF) upgraded its economic forecasts on the Philippines while the central bank’s Monetary Board kept its key policy rates at record lows.
The peso strengthened to 46.99 to $1 before closing at 47.10 to $1, five centavos weaker than Thursday’s P47.05 to $1.
The peso opened at the day’s low of 47.21 to $1 and rallied to its strongest level of 46.99 to $1 before settling at 47.10 to $1.
Volume of transactions amounted to $695.5 million from Thursday’s $1.102 billion.
Traders attributed the robust performance of the peso to the revised economic forecasts of the IMF and the decision of the Bangko Sentral ng Pilipinas (BSP) to keep its key policy rates unchanged.
Traders also believed that the central bank intervened in the foreign exchange market to smoothen the strengthening of the peso against the dollar.
IMF Philippine Representative Denis Botman announced Thursday that the international lender raised its gross domestic product growth forecast for the Philippines to one percent instead of a one-percent contraction.
The IMF also upgraded the GDP growth forecast next year to 3.2 percent instead of 2.25 percent.
The upward revision, according to Botman, was mainly due to the projected recovery of the exports sector that is expected to grow in double digit level next year as well as the four-percent rise on remittances from overseas Filipinos.
The country’s GDP growth went down to one percent in the first half of the year from four percent in the same period last year due to the full impact of the global economic meltdown.
Bleak economic prospects, however, brightened after the country’s GDP posted a stronger-than expected growth of 1.5 percent in the second quarter after a dismal 0.6 percent expansion in the first quarter.
“The great recession is ending. The Philippines has been able to weather the global financial storm well due to past reforms,” Botman said Thursday.
Likewise, the central bank’s Monetary Board decided to keep its policy rates at a record low of four percent for its overnight borrowing rates and six percent for its overnight lending rates.