Peso continues gain versus dollar

The peso strengthened further yesterday to its highest level since May 2002 on prospects of a better economy due to the country’s improving financial position.

At the Philippine Dealing System (PDS), the peso closed at 49.88 to the dollar. The local currency last touched the 49.84-to-$1 level on May 23, 2002.

The start of trading saw the peso at 49.95 with $418.60 million changing hands.

Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said in a text message to Bloomberg that strong economic conditions, particularly the country’s fiscal position, buttressed the peso.

The peso may also draw support from remittances and investment inflows, Tetangco said.

Stock exchange data also showed that foreign investors bought some $392.2 million of local shares this year, a development that contributed to the peso’s 6.4 percent gain.

The Bureau of Treasury said the country posted a budget surplus in August on record revenue.

"The fundamentals are all moving in the right direction for the peso, with the government finances looking a lot better," said Magnus Prim, a senior currency strategist at Skandinaviska Enskilda Banken in Singapore. "We’re not going to stop here and could keep going higher."

The peso has risen 1.7 percent in the past month and may climb to P49 by the end of the year, said Prim.

Economic Planning Secretary Romulo Neri said the government aims to keep the economy growing by spending more on roads, bridges and other infrastructure and making it easier for Filipinos abroad to invest their money locally. The economy grew at the fastest pace in a year in the second quarter, Neri said.

Remittances from overseas Filipino workers comprise about a 10th of the economy. OFWs remitted $1.05 billion in July, BSP said.