THE local currency is looking to end 2019 at about P2.7 stronger than its level in 2018, a regional banking institution forecasts.
In a recent briefing in the Philippines, executives of the MUFG Bank Ltd. said it forecasts the local currency to end the year at P51 to a dollar.
Latest data from the Bankers Association of the Philippines showed that the peso is already on an appreciation trend, as the latest exchange rate hit P50.483 to the greenback. This is more than a peso stronger than the P51.504 average in the previous month. The Philippines joins Japan, China, South Korea, Taiwan, Singapore, Indonesia and Thailand as the countries whose currencies are expected to perform better toward the end of the year.
For next year, however, MUFG says the peso will likely move toward a depreciation bias as it forecasts the local tender to gradually slide to P51.50 to a dollar in the first quarter of 2020; to end June at P52 to a dollar. This goes on to P52.5 by the end of the third quarter of next year.
MUFG, Japan’s largest bank, said that while the rest of the world and their respective currencies worry about global uncertainties, the Philippines’s business-process outsourcing receipts, as well as dollar inflow from overseas Filipino workers (OFWs) serve as buffer for the peso and keep it afloat despite the country’s trade deficit.
Latest data from the Bangko Sentral ng Pilipinas showed cash remittances grew 4.6 percent in August this year as OFWs sent $2.59 billion cash back home during the month.
The August inflow of remittances pushed the total cash sent by OFWs to $19.81 billion in the first eight months of the year. This is 3.9-percent higher during the same January-to-August period, which was at $19.06 billion.
Just recently, the Bank of the Philippine Islands (BPI) made its own assessment of the local currency, saying their medium-term outlook for the currency pair is still the same: the peso may continue to depreciate given the country’s growth story and current account deficit.
BPI sees the peso hitting P51.3 to a dollar by year’s end and P52.9 to a dollar by the end of 2020.