At the Philippine Dealing System (PDS), the peso gained by a substantial 19 centavos to close at 52.59 from Monday’s close of 52.78 to the dollar.
The currency has strengthened since Finance Secretary Margarito Teves said it would advance if the country’s economy improves, helping reduce its debt payments.
The peso touched the lowest since January on May 24 as investors sold shares for a second week on concern global growth will slow and damp demand for the nation’s exports.
"People are going to be getting back into stocks and that’s going to be a positive for the currency,’’ said Marcelo Ayes, first vice president for treasury in Manila at Equitable PCI Bank. " There’s still sustained growth in the economy, so sentiment is good."
The peso opened yesterday’s trading at 52.80 before hitting a high of 52.575 to a dollar.
Transaction was heavy at $629.27 million on an average rate of 52.654 to $1.
It may climb to 52.50 this week, said Ayes.The Bangko Sentral ng Pilipinas (BSP) said there was a month-end demand for dollars but there were also inflows from exports and overseas Filipino workers (OFWs).
OFW inflows normally peak at the end of May and early June as OFW families prepare for tuition expenses and the reopening of classes in June. Remittances would let up slightly after June and then peak again towards December.
Dealers also said that since offshore noise had settled down somewhat, the market now would have the opportunity to focus on the country’s fundamentals, including the fact that the Arroyo administration actually managed to generate a rare budget surplus in April.
Amid complaints by exporters about the appreciation of the peso against the dollar, the International Monetary Fund (IMF) said the level of the exchange rate was not a threat to the country’s medium-term competitiveness.
At the conclusion of its annual review of the country’s economic performance, the IMF said in its report that competition from China and the Asian region in general explained some of the recent weakness in export growth.
However, the IMF said the situation did not primarily reflect an overvalued exchange rate, pointing out that this was "rarely cited as a factor impeding investments in the Philippines."