Peso tests record level, closes at 40.86:$1

GMA News January 2, 2013 4:57pm

On the first trading day of 2013, the peso flirted with its last record high as investors poured money into riskier assets amid positive developments on the US fiscal cliff talks.

The Philippine unit gained 19 centavos to close Wednesday at 40.86 to the dollar, stronger than its 41.050:$1 last Friday. Some $931.8 million were traded on Wednesday, higher than the $677.3 million previously.

The peso, which is the second best performing currency in Asia after the Korean won, last hit a record high of 40.85:$1 on Dec. 5 last year.

"The peso's appreciation was a reaction to deal in the US providing leeway for lawmakers to find a final solution to the looming recession in the US," a trader said by phone.

In a separate interview, a second trader said investors took on riskier assets like the peso following US President Barack Obama's announcement that he will sign a deal increasing taxes on only the 2 percent wealthiest Americans.

"Demand for riskier assets including the peso increased following the passage of the fiscal bill," he said, explaining that strong demand pushed the peso "to test its previous record."

The second trader said remittance inflow at the weekend also contributed to the peso's strength.

Traders expect the peso to move within the 40.70 to 41.00 per dollar band Thursday. — BM, GMA News