Peso advances vs dollar after BSP posts higher Nov. remittances

The peso strengthened further against the dollar on Monday as data from the Bangko Sentral ng Pilipinas (BSP) showed remittance inflows grew in November.

The local currency ended at PHP 55.77 against the greenback on Monday, up by 14.1 centavos from Friday’s PHP 55.911 close, data from the Bankers Association of the Philippines’ website showed.

The peso opened Monday’s session stronger at PHP 55.85 per dollar. Its weakest showing for the day stood at PHP 55.95, while its intraday best was its close of PHP 55.77 versus the greenback.

Dollars traded dropped to USD 1.31 billion from USD 1.69 billion on Friday.

The peso appreciated on Monday following the continued growth in cash remittances in November, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Money sent home by overseas Filipino workers (OFWs) grew by 2.8% to USD 2.719 billion in November from USD 2.644 billion seen in November 2022, BSP data released on Monday showed.

The growth in cash remittances was the slowest annual pace in two months or since 2.6% in September.   

On the other hand, the amount of money sent by OFWs in November was also the lowest in six months or since USD 2.494 billion in May 2023. It also declined by 9.3% from USD 2.998 billion in October.

For the January-to-November period, cash remittances coursed through banks rose by 2.8% to USD 30.211 billion from USD 29.38 billion a year earlier.

This was below the BSP’s 3% remittance growth projection for 2023.

The peso strengthened on Monday as the local stock market continued to gain for the third straight day, Mr. Ricafort added. 

Security Bank Corp. Chief Economist Robert Dan J. Roces added that the lower-than-expected US producer price index (PPI) in December “fueled selling opportunities despite ongoing rallies.” 

Data from the US Labor department released on Friday showed the US PPI dipped by 0.1% in December, marking its third straight month of decline.

Mr. Ricafort said easing producer prices in the US could support rate cuts from the Federal Reserve in the second half of 2024.

“As a result, the gauge of the US dollar versus major global currencies also corrected slightly lower recently from three-week highs,” he said.

The Fed kept borrowing costs steady at 5.25-5.5% for the third straight time at its December meeting. This was after it hiked policy rates by 525 basis points (bps) from March 2022 to July 2023.

Back home, the BSP raised interest rates by 450 bps from May 2022 to October 2023 to tame inflation and mirror the US Fed, bringing the key rate to 6.5%, the highest level in 16 years.

For Tuesday, Mr. Ricafort gave a forecast range of PHP 55.70 to PHP 55.90, while Mr. Roces expects the local unit to move within a wider range of PHP 55.70 to PHP 56 per dollar. — Keisha B. Ta-asan