The peso opened strong at 52.150 and at one point even strengthened to as high as 52.085 to the dollar.
Analysts said the market was anticipating a possible increase in interest rates in Japan, the first time in six years that the Bank of Japan (BOJ) would increase its rates.
They also said that spreading optimism that the US Federal Reserve would start going slow on US rate hikes also boosted market sentiment.
Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr said an increase in Japanese interest rates is widely expected to boost the yen which would then boost regional currencies including the peso.
"The peso was tracking regional movements and was likely to continue to do so in the absence of domestic factors that affect market sentiments," Tetangco said.
At the Philippine Dealing System (PDS), total transaction amounted to $455 million on an average rate of 52.135 to the dollar.
BSP Deputy Governor Diwa Guinigundo said the improvement in the country’s economic prospects was attracting investors back into the market and dollar inflows would continue to bolster the peso.
Earlier, the BSP reported that foreign investments did not really leave the country and largely stayed in foreign currency deposit units (FCDU) accounts instead of pulling out completely.
Emerging markets like the Philippines had been the target of much speculation and investors expected instability to attend the rise in US rates especially in countries with huge trade deficits and problematic reserves.
The Philippines, however, appeared to have weathered the wait with only occasional outbursts in the market.
According to Guinigundo, there were indications that investors that pulled out of the equities market did not even leave at all, as indicated by movements in foreign currency deposit units.
"If investors appeared to have pulled out, they merely shifted to FCDU deposits," Guinigundo said.