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Philippine Peso Surprises to Become Asia’s Best Currency

Philippine Peso Surprises to Become Asia’s Best Currency

The Philippine peso has defied a yawning current-account deficit to emerge as Asia’s best-performing currency in February. And it may continue to surpass its peers.

Peso bulls say record remittances, rising investment and a buoyant domestic economy will propel further gains in the currency. Easing inflation could also lend a hand, as higher real yields burnish the appeal of Philippine bonds.

The peso is among Asia’s biggest turnaround stories, as the currency bounced back from a 13-year low after a slew of economic reforms and a $170 billion infrastructure spending plan revived sentiment. Proactive central bank policy has also helped win over skeptics.

“The peso has been stronger recently and could continue to outperform in the region, amid sustained net foreign portfolio investments on a widely expected further declining trend of local inflation,” said Mike Ricafort, economist at Rizal Commercial Banking Corp. in Manila.

The Philippine currency strengthened 0.8 percent in February to 51.70 per dollar, the best performance among Asian currencies. It has climbed since the start of the year, as a pause in Federal Reserve tightening and easing global trade tensions fueled demand for developing-nation assets.

The peso was among the hardest hit in the emerging-market sell-off last year, tumbling to a 13-year low of 54.41 in October as investors punished economies running current-account deficits.