MANILA -- The Philippine peso will end the year at PHP54 to a US dollar, Fitch Group’s research arm forecasts.
BMI Research reported Wednesday that the outlook for the Philippine peso is weaker compared to its previous projection of PHP51 to a dollar for 2018.
The think tank also adjusted its full-year 2018 average forecast to PHP52.50 to a dollar from PHP51.98 to a dollar in the first semester of the year.
“The Philippine peso continues to be the worst performing currency in the region, having weakened by more than 7 percent against the US dollar year-to-date,” the BMI Research said.
“Technically, the Philippine peso is looking bearish after breaking through support at around PHP53.20 to a dollar level,” the Fitch unit said, noting that local currency has not yet reached its extreme levels and further weakness is in the horizon.
“We see the next level of possible backstop at around PHP53.70 to a dollar, followed by at approximately PHP56 to a dollar if the support fails to hold,” it added.
For 2019, the BMI Research forecasted the peso to stand at an average of PHP54 to the greenback. It remained neutral on the local currency and seen it “will likely outperform in total return terms”.
On the positive side, it noted that strong and stable remittances will anchor the currency. Remittances account for over 10 percent of the country’s gross domestic product.
BMI Research cited risks that might affect the outlook for the local currency, which include “the outbreak of a full-blown US-China trade war could lead to an increase in risk off sentiment globally and emerging market assets are likely to bear the brunt of the capital flight to safety” and if the Bangko Sentral ng Pilipinas fail to keep pace with the US Federal Reserve System’s interest rate hikes. (PNA)
