Analysts see peso falling past 13-year lows in 2019

A street vendor counts peso bills above her makeshift stall. BLOOMBERG

MANILA – Despite trading at the P52:$1 level on the seasonal influx of remittances, analysts are expecting the local currency to depreciate beyond 13-year lows against the dollar in 2019, given the country’s widening trade deficit.

The local currency is expected to be highly affected by the country’s widening trade gap, First Grade Finance Inc. managing director Astro del Castillo told GMA News Online.

“It’s a thing to look at, the trade deficit,” he said.

Data from the Philippine Statistics Authority (PSA) showed the balance of trade in goods having a $4.212-billion deficit in October, compared with $2.585 billion in the same month last year.

The trade gap will likely weigh on the peso, softening the currency even beyond the near 13-year low of P54.425:$1 on September 25, according to a London-based economic consultancy.

“We expect the peso to fall 5.0 percent to 55 to the dollar by the end of 2019,” Capital Economics said in a commentary.

“With weak global demand set to drag on exports and the government’s infrastructure program likely to keep imports strong, the current account deficit is expected to widen further over the coming quarters. This in turn is likely to put renewed downward pressure on the peso.”

This was mirrored by First Metro Investments Corp. (FMIC) and the University of Asia and the Pacific (UA&P), noting the trade deficit continues to put a drag on the local currency.

In “The Market Call” released this December, FMIC and UA&P said the peso is expected to close 2019 at P53.90:$1.

“Meanwhile, the Philippines’ widening trade and higher consumer prices put downward pressure on the peso,” the report read.

The Philippine peso closed 2018 on a strong note against the greenback on Friday, boosted by the seasonal influx of remittances from overseas Filipinos for the Christmas and New Year  holidays.

The local currency gained 8.5 centavos to close at P52.580:$1 from 52.665 on Thursday.

“The peso appreciated … on … influx of year-end dollar transaction … for the holidays,” Land Bank of the Philippines market economist Guian Angelo Dumalagan said.

It gained 28 centavos week-on-week, from P52.860:$1 on December 21. The local unit was weaker by P2.77 from 49.810 on Jan. 3, the first trading day of 2018. (GMA News)


Please enter your comment!
Please enter your name here