Peso seen weakening to P58 per dollar
There’s a possibility that the peso may weaken to the P58-per-dollar level as the anticipated rise in imports would likely prop up local demand for the already strong greenback.
The Marcos administration now expects the local unit to average between P55 to P58 against the US dollar next year until 2028, weaker than its old forecast range of P53 to P57, latest projections by the interagency Development Budget Coordination Committee (DBCC) showed.
The government projected such a currency weakness as it also expects imports to rebound in 2024.
New assumptions by the DBCC showed imports are forecast to return to growth mode at 7 percent next year—from a projected 3-percent contraction in 2023—on the back of stronger infrastructure investments that could push up inbound shipments of construction materials. The state also expects “increased domestic production capacity.”
The DBCC, meanwhile, retained its imports growth projection for 2025 to 2028 at 8 percent on “anticipated increase in demand and trade activities globally and domestically.”
So far, the peso posted its worst finish for this year in September when it nearly touched the P57-per-dollar mark and became one of Asia’s worst-performing currencies in the third quarter.
The Bangko Sentral ng Pilipinas at the time hinted at defending the local should it slide past the P57-level, as rising rates in the United States powered up the dollar while soaring world crude prices bloated the Philippines’ import bill.
But the local currency gained some strength at the start of the fourth quarter and has been trading below the P56 mark since.
The DBCC said the peso will “continue to be supported by structural foreign exchange inflows, narrower current account deficit projections and ample foreign exchange reserves.”
Zooming out, most Asian currencies are poised to outperform their counterparts in other regions as rates among developed economies start to fall.
In a commentary sent to journalists, London-based Capital Economics said most Asian currencies are projected to recover next year after being pressured by the global tightening cycle. INQ
