Analysts see further decline in peso
Analysts expect the Philippine peso to fall even more against the US dollar this year as economic activity picks up.
They predict the peso will end this year at $ 51-52: 1, after dropping to P 50.99 to the US dollar last year.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., forecast an exchange rate of P51-52: $ 1 for this year, saying the reopening of the economy could lead to more import activity, as well as ‘an increase in infrastructure spending, in particular before the elections and for the reconstruction of areas devastated by Typhoon Odette.
“Election-related leads could also partly determine the direction of the exchange rate,” he said.
Japan-based MUFG Bank Ltd. expects the Philippine peso’s downtrend to continue this year, with an exchange rate outlook of P51.500: $ 1.
The widening of the Philippines’ current account deficit this year, MUFG said, is due to larger trade deficits due to stronger domestic demand, as well as a higher value of oil imports given higher prices. Brent crude oil potentially higher on average in 2022 compared to 2021.
“This comes on top of an increase in infrastructure spending, most likely in 2H21 after the elections and the expiration of the state spending ban between March 25 and May 8, 2022,” he said. he adds.
This year, the government expects the exchange rate between the peso and the US dollar to drop from P48 to $ 53: 1.