The peso extended its rally against the dollar yesterday to close at a seven-week high as better-than-expected employment data in the US and preliminary data indicating that American banks are faring well improved risk-taking among offshore investors.

The local unit gained 30 centavos to close at P47.45:$1, up from Wednesday’s close of P47.75.

The last time the peso was as strong was on Feb. 17 when it closed at P47.50 to a dollar.

Yesterday marked the sixth consecutive trading day that the peso advanced against the dollar.

It opened at the day’s low of P47.64 and hovered at P47.40 in early trade before it settled at the day’s close.

Volume of transacted dollars, however, thinned to $970.76 million from Wednesday’s $1.06 billion.

"It was a continuation of the peso’s appreciation in the last few days. People have settled down and are no longer worried on the possible results of the bank stress test in the US. That improved the risk appetite of investors," Rafael S. Algarra, Jr., treasurer at Security Bank Corp., said in a phone interview.

He was pertaining to the leaked results of bank stress tests in the US, which indicated that even if some banks may have to shore up their capital, American banks in general are in good shape and are healthier than expected.

The official results of the stress test are due today.

"Investors are getting comfortable with the situation. They have already priced in the results of the stress tests," he added.

A currency trader said US employment data released on Wednesday night which showed a slowdown in unemployment also fueled risk-taking among offshore investors.

Private sector payroll firm ADP Employer Services released results of its survey showing the number of layoffs in the private sector had slowed to 491,000 in April from 708,000 in March.

"There was risk-taking across markets because of the favorable employment figures," the trader said.

He added that data that showed improvement in business activity in Europe also contributed to the positive sentiments of investors toward Asian assets including those from the Philippines.

Mr. Algarra also said that while there was corporate demand for dollars, there was sufficient supply in the system coming from remittances.

He said the peso is expected to extend its rally today as the dollar remains weak overseas. However, he said a reversal of the trend could take place if the official results of the stress tests in the US would not meet the expectations of market players.