Easing political tensions also contributed to the strong performance of the peso, which closed at 50.94 to the dollar.
At intraday, the peso went to as high as 50.91 to $1 but it corrected as traders feared the Bangko Sentral ng Pilipinas (BSP) might intervene. The peso was last above 51 on an intraday basis on April 5.
Yesterday’s close was the highest since July 25, 2002, when the peso traded at 50.66 to the greenback.
Encouraged by the country’s improving fiscal position and overall economic prospects, foreign portfolio investments found their way back to the equities market — eager for holdings in industries seen most likely to benefit from the expected economic surge.
Traders said the relative stability on the political front had encouraged investors to explore the market, BSP Governor Amando Tetangco Jr. said.
He stressed there was nothing surprising about the strength of the peso since the market was clearly driven by optimism about the economic fundamentals.
"Clearly, they expect better fiscal numbers and good economic growth," Tetangco said. "Naturally, the peso would continue to appreciate."
He said the peso was also tracking the general strength of other regional currencies due in part to market expectations that the US would pause in its tightening cycle.
Asian currencies also reacted favorably to the fall in oil prices which dropped to their lowest levels in more than two months.
Nine economists surveyed by Bloomberg News said gross domestic product grew 1.9 percent from the first quarter, after a 0.9 percent rise in the three months to March.
Inflation may ease for a fifth month in August because of "continued firmness of the peso and lower food prices," Tetangco said.
"Growth in the Philippines looks quite good, while inflationary pressure is easing," said Daisuke Uno, a strategist of the treasury unit in Tokyo at Sumitomo Mitsui Banking Corp., a unit of Japan’s third-biggest lender by assets. "That’s a very good combination for the currency."
The currency may strengthen to P49.25 in a few months, Uno said.
The peso also strengthened because a chart some traders use to predict prices indicated the currency may advance further.
The rally breached a so-called resistance level, an area where people expect more selling, of 50.95 accelerated gains, according to Uno.