Asia's Best-Performing Currency Gets Boost as Central Bank Stands Aside

Philippine peso. (Photo: Bloomberg)

By Siegfrid Alegado and Ditas Lopez

The Philippine peso advanced closer toward the psychologically significant level of 48 per dollar after central bank Governor Benjamin Diokno said the market was free to determine its level.

Asia’s best-performing currency this year advanced to as strong as 48.62 on Monday after Diokno told Bloomberg Television: “If that’s where the market is going, we can’t do anything about that at the moment.”

There are a number of benefits to having a strong currency, Diokno said. These include weaker inflationary pressure, lower foreign debt service costs, and the potential for beefing up international reserves.

(Source: Bloomberg)

The peso has strengthened more than 4% this year, helped by a weaker U.S. dollar and a reduction in imports as the coronavirus pandemic saps demand in the Philippine economy. The currency was 0.1% stronger Monday.

“Expect the peso to advance towards 48 in the medium term,” said Qi Gao, a currency strategist at Scotiabank in Singapore. “While the central bank will step in to ensure orderly market conditions, it won’t go against the market.”

© 2020 Bloomberg L.P.