The Philippine peso appreciated to its highest value in three years. The appreciation of currency yields some positive and negative effects to the economy of the country. Some economists have asserted the fact that a strong peso is clear evidence that the confidence of the business investors have returned to the Philippines. The influx of foreign portfolio investment was the direct cause of the remarkable performance of the country’s currency according to the Central bank of the Philippines. According to BSP Deputy Governor Diwa Guinigundo, the reason of the increased foreign investment was due to the preference of most investors to invest their business in emerging Asian economies like the Philippines. This preference for an Asian market is due to the recent global recession and the high debts that the United States and European nations are undergoing.
"Advanced economies appear to be moving backward.. Any logical direction of investment inflows is toward the more robust and promising emerging markets," Guinigundo stated this during the launching of the latest World Investment Report by the United Nations Conference on Trade and Development (UNCTAD) on Tuesday.As of June 17, the net inflow of foreign portfolio investment is US$ 136.68 million which is comparatively high than the net inflow of only US$2.40 million during the same period in 2010.During Tuesday the trading closed at 42.225 Philippine pesos against 1 U.S. dollar, up by 16.5 centavos from Monday's finish of 42.39: 1 dollar.The Philippine pseo peaked to 42.11: 1 dollar, the highest value that was ever recorded since May 2008.
Guinigundo said that besides the faster economic growth rates in the region, higher interest rates in Asia also helped entice foreign portfolio investors to put their investment here.
Interest rates in emerging Asia are rising while those in the West, led by the United States...