The Philippine peso posted the best performance among Asian currencies this month, supported by rising remittances and record-high foreign-exchange reserves.
The peso rose 1.1 percent in August to 46.58 per dollar at the close of trading in Manila, its biggest monthly gain since March, according to Bankers Association of the Philippines data compiled by Bloomberg. The currency fell 0.2 percent on Wednesday.
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. He forecasts a trading range of 46 pesos to 47.50 over the near term, adding the peso is likely to seek its own level as central bank refrains from intervening.
The country’s foreign-exchange reserves climbed to an unprecedented $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 Tetangco said Tuesday. “What we don’t want to see is too much volatility and sharp fluctuations in the exchange rate.”