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SINGAPORE—Philip
Wee, a senior currency economist for DBS Bank Ltd. in
Singapore, comments on the Philippine peso and the
Indonesian rupiah.
The peso
will slide to P47.10 per dollar in the next three to six
months, Wee forecast. The peso closed at P43.75, from
P43.515 Monday.
The
rupiah will depreciate to 9,500 per dollar by the end of
the year, he predicted. The rupiah traded at 9,318 in
Jakarta,
according to data compiled by Bloomberg.
On the
peso:
“History
has shown that the US dollar-Philippine peso can return
up to 44 percent of its past three years’ move. If so,
this should translate to P47.10, the last high seen in
September 2007.
“The
fundamentals have weakened. The peso appreciated three
years from 2005 to 2007 on the back of rising economic
growth and falling inflation.
“This
year, growth is expected to slow while inflation has
surged. Slower growth will pressure fiscal finances via
lower revenue collection and more government spending.
Meanwhile, higher commodity prices have pressured the
trade balance via costlier imports.”
On the
rupiah:
“The
weak US dollar has helped balance the depreciation
pressures on the Indonesian rupiah this time around,
unlike 2005 when the dollar was very strong. But this
support may evaporate when the US starts hiking rates
again. DBS expects the Fed to start taking back rate
cuts in the fourth quarter of 2008 into the third
quarter of 2009.”
“With
inflation now above 10 percent, Bank Indonesia is
expected to hike rates by 50 basis points to 8.75
percent on Thursday. Although the Indonesian government
responded with fuel subsidy cuts, worries over the
health of its fiscal finances will not subside as long
as oil prices continue to trend higher.” (Bloomberg) |
