The Philippine peso is set for the best performance among Asian currencies this month, supported by rising remittances and record-high foreign-exchange reserves.
The peso was at 46.545 per dollar as of 12:47 p.m. in Manila, up 1.2 percent from end-July and headed for the biggest monthly gain since March, according to Bankers Association of the Philippines data compiled by Bloomberg.
The reason for the peso’s outperformance “remains the same—strong economic fundamentals,” said Alan Cayetano, head of foreign-exchange trading at Bank of the Philippine Islands. “There seems to be some support near 46.70 to 46.80 per dollar, but once it’s gone, the peso has been seeking its own levels,” Cayetano said, forecasting a range of 46 to 47.50 over the near term.
The country’s foreign-exchange reserves were at a record high of $85.5 billion in July and remittances in June were up 4.8 percent, the fastest growth since February, according to central bank data released this month. Remittances have fueled consumer spending, which underpins economic growth.
The Bangko Sentral ng Pilipinas sees the peso supported by a healthy combination of strong growth and slow inflation, as the authority sticks to a flexible foreign-exchange policy. “We allow supply-and-demand conditions to determine the exchange rate,” Governor Amando M. Tetangco Jr. said on Tuesday. “What we don’t want to see is too much volatility and sharp fluctuations in the exchange rate.”