The Philippine peso advanced closer toward the psychologically significant level of 48 per dollar after Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said the market was free to determine its level.

Asia’s best-performing currency this year advanced to as strong as 48.62 on Monday after Mr. Diokno told Bloomberg Television: “If that’s where the market is going, we can’t do anything about that at the moment.”

There are a number of benefits to having a strong currency, Mr. Diokno said. These include weaker inflationary pressure, lower foreign debt service costs, and the potential for beefing up international reserves.

The peso has strengthened more than 4% this year, helped by a weaker US dollar and a reduction in imports as the coronavirus pandemic saps demand in the Philippine economy. The currency was 0.1% stronger Monday.

“Expect the peso to advance towards 48 in the medium term,” said Qi Gao, a currency strategist at Scotiabank in Singapore. “While the central bank will step in to ensure orderly market conditions, it won’t go against the market.” — Bloomberg