While the central bank has cut interest rates three times this year to spur growth – which typically saps demand for a currency – slowing inflation has ensured that real yields on the nation’s bonds have remained among the highest in Asia, drawing in overseas investors.

The country’s annual inflation rate dropped to 0.9% in September from 6.7% a year earlier as rice prices slumped after the government liberalised imports and the cost of alcohol, housing, water and electricity all declined.

The slowing inflation rate has pushed up the real yield on the nation’s 10-year bonds to 3.77% as of late last week, from as low as 0.33% in November 2018, according to data compiled by Bloomberg.

Inflation is forecast to have cooled even further in October, with a report due Tuesday expected to show the level slipped to 0.8% that month, the lowest since April 2016, according to the median estimate of economists surveyed by Bloomberg.

That compares with the most recently published figures of 3.13% for Indonesia, 3.99% for India and 1.1% for Malaysia.

The tailwind of high real yields has seen the peso strengthen 3.6% this year and reach 50.715 per dollar last week, the strongest since January 2018.

The Philippine currency has two other major factors supporting it too, said Divya Devesh, head of Asean and South-Asia currency research at Standard Chartered Plc in Singapore.

The trade deficit has narrowed due to a delay in implementing the budget in the first half of the year, while the country has been largely insulated from the US-China trade dispute due to its low reliance on exports, he said.

The peso may also extend gains as money sent home by overseas workers tends to rise in the last four months of the year.

December has been the peak month for remittances in each of the past 10 years. It may end up being a profitable Christmas for peso bulls.