Philippines Peso : Best Performing Currency in Asia

The Philippine Peso is now the best performing currency in Asia for 2007 (as of December 5) beating the Indian Rupee and other strong currencies in the region.


The local stock market hit a record high in June 1, 2007 while the peso is trading at around the PhP 42 level to a US dollar and is currently PhP 42.79 as of November 9, 2007, appreciating by 14%, edging out the Indian rupee.

There are only two reasons for the strengthening of the peso:

First, the Philippine economy is booming (although more than half of Pinoys think otherwise). We must admit that our President’s Expanded Value Added Tax law, although contradicted by the all-knowing “holier-than-thou” activists, renewed the investors’ interest in the Philippines. Because of this, our inflation decreased while interest rates have increased. The peso also became the favorite among currency traders in Asia.

Second, the remittances of thousands of Overseas Filipino Workers (OFW) estimated to hit a record of $14.7 billion this year, 15 percent higher than the peak last year and the highest in 20 years.

The peso has also risen over 8 percent against sterling since the start of the year and 2 percent against the euro.

Economists expect the peso to continue strengthening. HSBC estimates it will hit 41 against the dollar by the end of next year from around 42.8 now. This morning alone, the peso almost hit the 41 bracket by registering another record-high of P42.28 against the US dollars.

In 2005, the Philippine peso finished as the best performing currency in Asia and the 5th strongest currency in the world. It gained 6 percent year-on-year against the US dollar to close at 53.09 as at end-2005 from 56.28 as at end-2005.

The Brazilian real was the best performing currency in the world at that time, strengthening by 13.7 percent against the US dollar in 2005. The second was the Kenyan shilling which gained 8.7 percent against the greenback. The Chilean peso and the Egyptian pound finished 3rd and 4th place by appreciating by 8.5 percent and 7.2 percent, respectively.

Last year, fourth largest economy in Asia - India - stole the best currency award from us. This year, our peso is no. 1 again. Political stability is the number one threat for us to maintain this feat this year.

SOURCE : STARMOMETER