MANILA, Philippines - The Philippine peso strengthened to an almost five-year high on Thursday, as investors were less anxious of a US recession after the world's largest economy averted falling off a fiscal cliff.
The peso gained 9 centavos to close at P40.77 to $1, against its P40.86-per-dollar finish on Wednesday.
"Basically, there was a risk-on sentiment after the budget deal was passed in the US," a trader said via telephone interview.
"This pushed investments in various assets, including those in the Philippines, and with that, we had a lot of dollar inflows," the trader added.
The trader further said some of the inflows went into equities, resulting in another record high for the Philippine Stock Exchange index on Thursday.
The peso was last seen appreciating as much on March 6, 2008, when it closed at P40.56 to $1.
Dollars traded on Thursday totaled $983.7 million, higher than the $931.8 million traded the previous day.
The local unit is seen to trade within the P40.70 to P40.85 per dollar band on Friday.