The Philippines’ budget and current account deficits will continue to put pressure on the peso throughout 2018 and beyond, Singapore-based bank DBS said as it forecast a decline to P54 versus the dollar by yearend a further fall to P56 in 2019.

In a report, DBS noted that high growth in the Philippines was now being accompanied by twin deficits, with the government’s budget shortfall having hit P350.6 billion while the current account deficit ballooning to $2.5 billion last year.

The bank also noted that overseas Filipino worker remittances, a traditional support for the peso, had been overtaken by record trade deficits.

“This has increased the peso’s weakness to higher US rates and a stronger US dollar,” DBS said, noting a 4.4-percent depreciation in just the first two months of this year compared to the full-year drops of 5.4 percent and 4.7 percent in 2016 and 2017, respectively.

The peso has traded between P51 to 52 per dollar since the end of January, the weakest in over a decade. It closed up 10 centavos on Friday at P51.93:$1.

DBS said the door had opened for the peso to fall to P54:$1 this year and to P56:$1 by 2019 – levels last seen 15 years ago.

“Although it comes as no surprise that the Philippine peso is depreciating for a sixth consecutive year, there is a need to be vigilant against signs of overheating in its economy,” the bank said.

It recalled that in November last year, the International Monetary Fund warned that credit gaps could approach “warning” levels in 2017 to 2018.

“Close attention should be paid to the increased leverage of some conglomerates and property developers, as well the expansion in shadow banking activities,” it said.

Furthermore, DBS said that given the twin deficits and higher inflation outlook, it expects the Bangko Sentral ng Pilipinas to eventually hike rates every quarter into the second quarter of 2019.

“This will help temper the depreciation pressure on the peso from the three Fed hikes we expect this year,” it pointed out.

Some analysts expect the Bangko Sentral’s policymaking Monetary Board to raise key interest rates during a meeting this Thursday, especially since inflation — measured under 2006 prices — hit 4.5 percent in February, breaching the 2.0-4.0 percent target.

Central bank Governor Nestor Espenilla Jr., however, has said that monetary authorities expect the rise in consumer prices to return to the target range next year.

During its last meeting on February 8, the Bangko Sentral’s policymaking Monetary Board raised its inflation forecast to 4.3 percent from 3.4 percent in 2018, above its 2 percent to 4 percent target range.

Last week, Espenilla also rejected “one-for-one” rate hikes in response to US Federal Reserve actions.

The US central bank, which will be holding a two-day policy meeting this week, is expected to announce its first interest rate hike for the year this Wednesday.