THE peso climbed against the greenback on Monday on the back of a continued drop in global oil prices due to falling demand caused by the coronavirus disease 2019 (COVID-19) as well as a decrease in Treasury purchases by the US Federal Reserve.

The local unit finished trading at P50.79 per dollar on Monday, appreciating by 11 centavos from its P50.90 close on Friday.

The peso opened the session at P50.90 per dollar. Its weakest showing was at P50, while its strongest was at P50.75 against the greenback.

Dollars traded decreased to $320.56 million on Monday from the $491.6 million seen last Friday.

A trader attributed the peso’s strength to recent moves from the US Federal Reserve which improved investor optimism.

“The peso appreciated after the US Federal Reserve announced a $15-billion reduction in daily bond purchases from the market and from optimism amid prospects of reopening the US economy,” the trader said in an email.

The New York Fed said it aims to purchase $75 billion in Treasuries starting this week. This will bring the daily purchase amount down to an average of $15 billion per day from the $30 billion per day seen last week.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso tracked the latest drop in global oil prices.

“The peso closed stronger, among its strongest in two years, after the sharp decline in global oil prices that could fundamentally lead to lower inflation,” Mr. Ricafort said in a text message.

Reuters reported that crude oil futures dropped in electronic trading on Sunday, succumbing to its lowest level since November 2001 on the back of falling demand due to the COVID-19 pandemic.

The trader expects the peso to trade within the P50.70 to P50.90 levels this Tuesday while Mr. Ricafort gave a forecast range of P50.60 to P50.90.

The peso was among the most stable currencies in Asia amid heightened volatility due to the pandemic, according to the Department of Finance (DoF).

In an economic bulletin, the DoF said the peso ranked third among the three currencies that maintained their value against the greenback in the region as of April 15, after appreciating by 0.04% versus the US dollar in its year-to-date value.

This was just behind Japanese yen’s 2.05% appreciation and Hong Kong dollar’s 1.28% appreciation, while all other countries recorded depreciation.

The 12 Asian currencies studied, based on Bloomberg’s data, include Chinese yuan renminbi, Japanese yen, Indian rupee, Philippine peso, Singapore dollar, South Korean won, Thailand baht, Vietnamese dong, Malaysian ringgit, Indonesian rupiah, Hong Kong dollar and Taiwan dollar.

“Despite the rising risks in the global economy, heightened by the spread of COVID-19, the collapse of global stock markets, the crash in Latin American currencies and the downgrading of credit ratings of many economies, the Philippine peso remained firm, almost unmoving from year-end 2019 level,” the DoF’s statement read.

The DoF said the peso-dollar exchange rate had also shown stability with a coefficient of variation of 0.26%, the smallest among the 12 regional currencies and lower than the 1.94% regional average.

“The main reasons for the peso’s growing strength and stability are the country’s strong BoP position and rising GIR. Strong foreign exchange inflows from exports of services, remittances, income from investments abroad, direct foreign investments and foreign borrowing all contributed to the strong BoP position. These in turn boosted the confidence in the Philippine peso,” it said.

“Strong macroeconomic fundamentals support the country’s financial position. The BoP surplus in 2019 was the highest in recent history. Manageable budget deficits and prompt adjustment of monetary settings in response to current developments help maintain investor confidence,” it added. – L.W.T. Noble and B.M. Laforga with Reuters

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