THE peso staged a strong recovery on Thursday, gaining more than half a peso against the US dollar to return to the P62:$1 level, as improved global market sentiment lifted the local currency.
The stronger peso and improved investor sentiment following the US midterm elections drove Philippine shares to extend their rally, although expectations of elevated inflation tempered market optimism.
The local currency appreciated by 56.5 centavos to close at P62.97 to a dollar from Wednesday’s P63.535 close.
This marked the peso’s strongest closing level since Oct. 14, when it ended at P62.87:$1.
The peso opened at P63.333 and traded between P62.90 and P63.35 during the session. Trading volume surged to $2.005 billion from the previous day’s $1.324 billion.
Union Bank chief economist Ruben Carlo Asuncion said the peso’s sharp recovery toward the P62 level largely reflected the repricing of global markets following the US midterm elections.
He said the Democratic sweep had pushed oil prices and US Treasury yields lower while weakening the dollar, a combination that was particularly favorable for the Philippines as a net energy importer.
“Lower oil helps the inflation and external-balance outlook, while the softer dollar provides direct support to the peso,” Asuncion said.
However, he cautioned that the peso’s rapid appreciation could be followed by some consolidation in the near term.
“The move has been quite rapid, however, so some near-term consolidation would not be surprising,” he added.
Weaker dollar
SM Investments Corp. economist Robert Dan Roces likewise attributed the peso’s rebound largely to the weaker dollar and improved market sentiment, with the US midterm election results likely providing additional support.
He said lower oil prices and profit-taking on dollar positions may have also contributed to the local currency’s gains.
“For now, this looks more like a relief rally than a sustained reversal, but it gives the peso some breathing room,” Roces said.
Metrobank chief economist Nicholas Antonio Mapa, meanwhile, said the peso was also benefiting from seasonal inflows, particularly remittances, at a time when import demand was slowing.
Mapa said the peso’s appreciation could ease pressure on the Bangko Sentral ng Pilipinas (BSP) to pursue more aggressive monetary tightening before the end of the year.
“Php strength limits the need for BSP to carry out overly aggressive tightening to close out 2026,” he said.
The BSP’s policy-setting Monetary Board has raised key policy rates by 50 basis points last month, bringing the benchmark interest rate to 5.5 percent, as the central bank continues to address elevated inflationary pressures.
US midterm elections
Philippine shares extended their rally on Thursday as a stronger peso and improved investor sentiment following the US midterm elections encouraged buying.
The Philippine Stock Exchange index (PSEi) rose 83.22 points, or 1.46 percent, to close at 5,778.14. The broader All Shares index likewise advanced 1.39 percent.
The market registered 122 advancers against 74 decliners, while 56 stocks were unchanged. Trading turnover reached P5.83 billion, net of extraordinary block sales, indicating that investors remained cautious despite the gains.
All sectoral indices ended higher except financials, which declined 1.04 percent.
Jollibee Foods Corp. led index gainers, jumping 7.89 percent, while Metropolitan Bank and Trust Co. was the biggest loser among PSEi constituents, shedding 3.17 percent.
Japhet Tantiangco, research manager at Philstocks Financial Inc., said the market’s rally was driven mainly by declining global oil prices following the US midterm elections, with the Democratic Party’s gains in Congress expected to increase pressure against the US war with Iran.
The peso’s appreciation against the US dollar also supported the local equities market, he said.
Luis Limlingan, head of sales at Regina Capital Development Corp., said the local bourse benefited from the peso’s strengthening to below the P63-per-dollar level, alongside improved investor sentiment following Wall Street’s positive reaction to the US election results.
Foreign investors also supported the rally, recording net inflows of P565.66 million during the session, according to Tantiangco.
Despite the market’s gains, Limlingan said investors remained cautious as elevated inflation continued to pose upside risks and could influence the Bangko Sentral ng Pilipinas’ next monetary policy decision.
