Strong peso hits 55-level against US dollar

Inquirer file photo

MANILA, Philippines — The Philippine peso appreciated to the 55-level for the first time in over seven months on Wednesday, as the greenback continued to be vulnerable to shocks emanating from US President Donald Trump’s erratic trade war.

The local currency finished yesterday’s trading at 55.84 against the US dollar, gaining 30.5 centavos from its previous finish of 56.145.

This was the peso’s best performance since closing at 55.69 on Sept. 20, 2024. At the same, it was the first time that the local unit traded in the 55 territory since Sept. 26, 2024, when the peso finished at 55.965.

Funds worth $1.68 billion switched hands during yesterday’s session.

At this point, the local currency is trading at a stronger level than the 56 to 58 foreign exchange rate assumption of the Marcos administration for 2025. The rally is happening as the US dollar posts its worst start to any year since 1989 amid the unprecedented uncertainties coming from Trump’s tariffs on America’s major trading partners.

READ: Strange sell-off in the dollar suggests waning faith in the US under Trump

A strong peso, in turn, could help keep inflation within the government’s target range.

April inflation

In a statement on Wednesday, the Bangko Sentral ng Pilipinas (BSP) said inflation, as measured by the consumer price index (CPI), might have settled at a range of 1.3 percent to 2.1 percent in April.

If the lower-limit of the forecast range is realized, the CPI that will be reported by the Philippine Statistics Authority on May 6 would be lowest in over five years, or since the 1.2 percent clip in November 2019.

It would also mark a further deceleration from the 1.8 percent price growth in March. Overall, the central bank’s outlook suggested that inflation stayed within its 2 to 4 percent target range last month.

Explaining its projection, the BSP said that apart from lower prices of key food items and oil, the peso appreciation also helped keep inflation tame in April. This can give monetary authorities more space to cut interest rates to support the economy amid the tariff-induced global storm.

“These could be offset in part by the higher electricity rates and LRT-1 fares,” the central bank said.

“Going forward, the Monetary Board will continue to take a measured approach in adjusting the monetary policy stance in line with its price stability objectives conducive to balanced and sustainable growth of the economy and employment,” it added.