The PESO will likely remain under pressure given global uncertainties, the research arm of Metropolitan Bank and Trust Co. (Metrobank) said, but is expected to strengthen in the long term.
In a report, Metrobank Research said the peso, just like other emerging market currencies, was continuing to experience bouts of depreciation traced to market volatility, movements in major economies’ central bank policy tools, and unstable oil prices.
“The peso continues to trade within the P47 to 48 range so far this year. The peso ended 2015 at P47.06, depreciating by 5 percent from the start of the year close,” it noted.
The currency is expected to end the year at P48 against the greenback under the assumption of higher imports, restrained US Federal Reserve rate hikes, and modest growth in overseas Filipino worker remittances.
“Nevertheless, our long-term outlook is still that of appreciation as foreign funds eventually flow back to the Philippines given the economy’s strong macro fundamentals, stabilization of the Chinese economy, and recovery of global commodity prices,” Metrobank Research said.
It expects full-year 2016 Philippine economic growth to come in at 6.3 percent, rebounding from last year’s slowdown to 5.8 percent, on the back of sustained state spending and robust consumption amid soft commodity prices, low interest rates and solid remittance inflows.
Election spending is also expected to support key services such as transportation, communication and storage, business activities and retail trade.