Peso closes at new 6-yr high

Strong dollar inflows spurred by rumors of a possible ratings upgrade propelled the peso to a new six-year high yesterday, closing at 47.26 to a dollar as foreign investors started buying into local shares.

At the Philippine Dealing System (PDS), the peso opened at 47.33 to the dollar and gathered momentum throughout the day’s session until it closed at its intra-day high of 47.26 to the dollar.

Market sources said the strength of the currency was buoyed by reports that Standard & Poor’s (S&P) could upgrade its stable outlook on the country’s ratings when its sovereign debt review is released after the elections.

Traders said the market was also reacting to the pronouncements made by the Bangko Sentral ng Pilipinas (BSP) that it was not too concerned about the strength of the peso as long as it still reflects the country’s economic fundamentals.

"Higher dollar reserves are giving the peso another boost," said Ed Garcia, a currency dealer at East West Banking Corp.

Moreover, the peso is expected to remain strong and possibly gain even more momentum as dollar inflows reach one of the main annual peaks right before the opening of classes in June.

"Right about now people are enrolling their kids," said one trader. "That means more dollar inflows from overseas workers."