MANILA, Philippines — The local currency vis-à-vis the US dollar last year maintained its strength despite heightened risk aversion sentiments due to lingering concerns over the debt crisis in Europe as well as worries over the weak global economy.

Based on Bangko Sentral ng Pilipinas (BSP) data, the peso’s annual cumulative volatility dropped to 0.524 percent at the end of December compared to end-December 2010’s 1.112 percent.

The lowest volatility annual rate, at least as far as BSP data would go in this series was in 1996, a pre-1997 Asian financial crisis rate, when the peso volatility was a low of 0.041 percent. The peso was its most volatile, predictably, in 1997 at near four percent. Fourteen years ago, the peso at P29.47 vis-à-vis the greenback depreciated by 11.04 percent.

In 2011, the peso closed in a position of strength at an average of P43.31: $1. The peso appreciated by 4.15 percent year-on-year. At the last day of December, the peso stood at P43.64: $1.

BSP Deputy Governor Diwa C. Guinigundo said that he sees no dramatic movements in the local currency for some time to come.

“We have strong foreign exchange buffers and this will continue to give strength to the peso,” said Guinigundo. “We expect that even if the global economic and financial upheaval continues, the peso will remain stable,” he added.

For 2012, Guinigundo reconfirms that the BSP is maintaining an ex change rate assumption of P42-P45: $1, which was the same assumption approved in April 2011 and maintained in November when all other macroeconomic assumptions were revised.

In a BSP report, it noted that the sustained foreign exchange inflows arising in part from remittances and continued portfolio and direct investments, remained the fundamental drivers of the peso’s buoyancy. At the end of 2011, gross international reserves, which tally all these inflows, reached $75 billion.

The BSP said the peso will likely remain strong on sustained inflows of net portfolio investments stemming  from investor’s renewed interest on listed securities and fixed income investments.

The peso will also continue to get a boost because of the continued balance of payments surplus which have reached more than $10 billion.

Based on a 2011 quarterly report on financial and economic developments, the central bank said the peso has benefited from hedge funds’ long position on emerging Asian currencies on optimism that the US debt stalemate has been resolved and data showing strong economic growth in the region.