Peso back at P51:$1 on ratings upgrade
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Thu, 02 May 2019 16:23:41 +0000
THE peso returned to the P51:$1 level on Thursday, hitting a two-week high, following the recently upgraded credit rating the Philippines received from S&P Global Ratings.
The currency, which opened at P51.77 against the greenback, gained 23 centavos to close at P51.87, its highest since its P51.76:$1 finish on April 17.
“The peso gets a nice boost from the S&P upgrade, with the PSE cresting the 8,040 level with foreign buyers likely pushing the index and the peso to strengthen in turn,” ING Bank Manila senior economist Nicholas Antonio Mapa said in a comment.
S&P on Monday upgraded the country’s investment-grade credit rating from “BBB+” to “BBB” with a stable outlook.
The upgraded rating is two notches above the minimum investment grade rating. It is also the highest the country has secured since 2013, when it was first assigned an investment grade rating by another credit rater, Fitch Ratings.
Mapa earlier claimed that the upgrade was a positive development for the local currency.
“The upgrade limits the reliance on interest rate differentials to bolster the PHP (Philippine peso), as foreign flows are seen to continue even with less attractive carry trade opportunities,” he said then.
The peso, he added, also bucked the general trend of a stronger dollar “after the US Fed shot down hopes for a Fed rate cut in the near term.”
The Federal Open Market Committee (FOMC) decided to keep US interest rates steady at its May 1 meeting, noting that both overall and core inflation have “declined and are running below” the 2-percent target.
In a commentary, the Metropolitan Bank & Trust Co.’s Treasury department said the FOMC ”continued their pledge of patience while giving no indication whether the next rate move would be up or down.”
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