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Peso projected to enter P47:$1 level

The exchange rate between the Philippine peso and the US dollar (USD) is likely to touch the P47:$1 level this month on the back of still weak greenback and seasonal inflows, according to analysts.

Union Bank of the Philippines chief economist Ruben Carlo Asuncion said the local currency may breach the P47:$1 territory next week within the range of P47.95 to P48.25.

“It is the longer-term weakness of the USD with the anticipated smooth transition of presidential power in the US and a waning coronavirus outbreak in 2021,” he added.

Asuncion also factored in the “seasonal strength” of remittances coming from overseas Filipinos, and the rise in commercial flows during the Christmas season.

For his part, Rizal Commercial Banking Corp. chief economist Michael Ricafort said a P47.90 to P48.00 trading range of the peso against the US dollar “ is within striking distance.”

He also took into account the expected seasonal increase in overseas Filipino dollar remittances and its conversion to peso for Christmas spending.

Ricafort added that other catalysts for the peso-dollar movement include the further progress on vaccines for the coronavirus disease 2019 (Covid-19), trend in new local cases, progress on the government’s legislative reform measures, and any developments in the United Kingdom-European Union trade deal.

The exchange rate outlooks compare to the P48.06:$1 closing on Friday, which was the last trading day of November.

The local currency finish at over four-year high and gained 5 centavos from the P48.11:$1 finish the previous day.

The government has a peso-dollar exchange rate assumption of P50 to P52 this year, a revision of its previous P50-to-P54 expectation.

Earlier, Bangko Sentral ng Pilipinas (BSP) said it expects the peso to sustain its strength on favorable investment sentiment and the gradual reopening of the country’s economy.

Over the near term, the peso should continue to reflect prevailing demand and supply conditions in the foreign exchange market, according to BSP Governor Benjamin Diokno.

“Favorable investor sentiment over the economy’s fundamentals is expected to provide support [for] the currency,” he added.

This is amid weaker inflows of exports, tourism receipts and remittances from overseas Filipino workers, which were affected by the Covid-19 pandemic.

“The peso is also expected to benefit from the gradual reopening of the economy amid ample policy support coming from the fiscal and monetary authorities,” Diokno further said.

For its part, the BSP highlighted its continued adherence to a freely floating exchange rate in line with its mandate to promote price stability and be consistent in its inflation-targeting framework for monetary policy.


Source: ManilaTimes
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