THE local currency is expected to enjoy an “appreciation bias” in the near term on the back of a softer dollar, according to an ING Bank Manila economist.
Data from the Bankers Association of the Philippines showed the peso traded at 52.26 to a dollar, losing 12 centavos from the previous day’s trade.
The peso has been consistently trading in the 52 territory in recent months after it peaked to an average trade value of 54 to a dollar in October 2018.
ING Bank Manila economist Nicolas Antonio Mapa said the peso is trading stronger against the dollar particularly in the beginning of the year on account of stronger foreign flows into both the local bond and equity markets.
“The Philippine peso saw episodes of strength as the government floated a new bond, but gains were capped with corporate demand limiting the appreciation,” Mapa said.
“In the near term, the Philippine peso should continue to enjoy an appreciation bias as long as the Fed remains dovish and investors chase yields in the region,” he added.
Although stronger compared to its previous month’s value, the peso was found to trail behind the rest of the region in terms of performance due to corporate demand. “Limiting the peso’s gains was onshore demand from corporates, as well as lingering concerns about the country’s current account deficit with the country still seen to experience stark demand for imports in the coming year,” Mapa said.
Image credits: Nonie Reyes