On Wednesday, the peso posted its best performance in more than two months, gaining 43.5 centavos to end the day at 56.94 pesos against the dollar.
The currency was last in P56:1 territory on September 13 when it closed at P56.77.
Trading opened at 57.25 pesos and ranged from 56.94 to 57.33 pesos. The total volume for the day was $687.85 million, slightly higher than the previous session’s $684.4 million.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the peso is likely to appreciate even more given the expected increase in dollars sent home by overseas Filipino workers (OFW).
“Yes [it will increase]ahead of next seasonal spike in OFW remittances and peso conversions [compulsory in nature] in preparation for the holidays in December 2022, especially a few days / weeks before the Christmas and New Year holidays,” he said.
This was echoed by China Bank chief economist Domini Velasquez, who said that “the peso is benefiting from remittance inflows in the last months of the year. In season, in most years, the peso strengthens from October to November, sometimes even in December.”
“The relatively weaker dollar also helped the peso to appreciate today,” she added.
Velasquez also noted that continued signals from the Bangko Sentral ng Pilipinas (BSP) to further raise the policy rate to support the peso “helped reduce the speculative activity that weakened the peso a few months ago.”
“It appears that the 100 basis point (basis point) interest rate difference between the BSP discount rate and the Fed funds rate is a golden spot for stabilizing the local currency. Going forward, we expect BSP to maintain this difference until at least the first quarter of 2023,” she added.