ING expects peso to end 2019 at close to 53:$1
Financial services giant ING Bank expects the peso to end at 52.89 to the greenback in 2019, from 52.58 in 2018.
In a report dated Oct. 8, ING Bank Manila senior economist Nicholas Mapa said the local currency ended better than the US dollar last week on a week-on-week basis after corporate demand for the greenback weakened.
The peso has been trading at 51-52 level against the greenback since the start of the year, which Mapa said makes the local unit the third best-performing currency in the region.
He projects the peso to trade between 51.746 to 52.292 against the dollar this week “with corporate demand likely to surge should we seea substantial widening of the trade deficit with the peso testing the upper end of this range.”
The Philippine Statistics Authority is scheduled to report the August 2019 trade data on Thursday.
Mapa noted that the report “should give an indication on the health of the external position of the Philippines but most dealers have priced in a still substantial trade gap.”
He forecasts the trade deficit to be about $3.69 billion for August, higher than the $3.39 billion last July.
“Growth should rebound in 2H (second half). Consequently, ING expects financial flows to return to the Philippines, which will in turn help bolster the peso to close the year at 52.89,” he added.
Growth, as measured by gross domestic product (GDP), posted an average of 5.5 percent in the first half of the year, lower than the full-year target of 6 to 7 percent.
Economic managers traced this to the impact of the delay in the approval of this year’s national budget that hampered the government to spend based on the program.
They, however, believe that the output will recover in the second half of the year with the help of the catch-up spending program, particularly on infrastructure projects. (PNA)