Peso seen to remain strong as OFW remittances come in

MANILA – An economist projects the peso to remain firm against the US dollar for at least another week as seasonal remittance inflows from overseas Filipino workers (OFWs) continue to pour in.

On Friday, the peso finished the trade at 50.04, sideways from its 50.045 close a day ago. It even touched the 49-level mid-trade.

In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the peso finished among its strongest in more than a month “as holiday-related spending could still continue until the New Year holiday.”

“The peso remains relatively stronger recently largely due by the widely expected surge/culmination of US dollar inflows and conversion to pesos in a typical year to prepare for Christmas/New Year spending spree by consumers/OFW families, as well as to finance Yuletide payrolls and other expenditures by businesses/exporters and other institutions that have US dollar/foreign currency revenues/income sources,” he said.

Ricafort said the local currency’s performance during the day may also be attributed to continued improvement in global market risk appetite with the US S&P 500 closing at new record highs.

This amid mostly better US economic data recently and some easing concerns over the Omicron variant with less risk of hospitalization based on recent studies, he said.

Ricafort said the currency pair is now near its levels when the pandemic started, or around 50.635 by end-2019.

He traced this to the return of the country’s trade figures to pre-pandemic levels, with the trade deficit now at its widest since January 2019.

Philippine Statistics Authority (PSA) data show that the trade deficit last October rose by 96.1 percent year-on-year, higher than the previous month’s 76.3 percent and a reversal of year-ago’s -42.7 percent.