The Philippine peso remained stable against the US dollar and was one of the strongest currencies in the Asian region, according to the latest data as of Dec. 1, 2023.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said in a report over the weekend that the peso gained by 0.6 percent to close at 55.400 on Friday from 55.76 at the end of 2022.
Ricafort attributed the peso’s strength to the prospect of a possible Federal Reserve rate pause or even rate cuts in 2024. He noted that markets have priced in a possible Fed rate cut as early as May 2024, and that the odds of a rate cut as early as March 2024 have increased recently.
The Indonesian rupiah and Singapore dollar also appreciated against the US dollar, while the Indian rupee, Thai baht, Chinese yuan, Korean won, Malaysian ringgit, and Japanese yen all depreciated.
Ricafort said another factor supporting the peso is the expectation of a seasonal increase in remittances from overseas Filipino workers during the holiday season. He noted that cash remittances in September 2023 rose to a two-month high of $2.91 billion, up 2.6 percent from the $2.84 billion a year ago.
In 2022, cash remittances rose 3.6 percent to a record $32.54 billion from $31.42 billion a year ago.
“The markets recently priced in a possible Fed rate cut as early as May 2024, while odds for a possible Fed rate cut as early as March 2024 already increased lately, and total Fed rate cuts of more than -1.25 percentage points for 2024,” Ricafort said.
“We continue to see the peso as one of the strongest currencies in Asia,” Ricafort said.