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Philippines: Peso to end 2021 weaker – analysts
THE peso will likely end the year weaker compared to 2020 given recovering import demand, analysts said.
After closing November at P50.39 to the dollar, analysts expect the peso to close out 2021 at P49-50:$1. It had ended at P48.02:$1 during the last trading day of 2020, the currency’s best finish in over four years.
ING Bank Manila senior economist Nicholas Antonio Mapa estimated a yearend close of P50.62:$1 “as import demand continues to outpace inflows and on some follow-through anxiety as the [US] Fed signals a rate hike may need to come sooner than previously expected.” Security Bank Corp. Assistant Vice-President Robert Dan Roces, meanwhile, forecast a P50.50-50.80:$1 close “on the back of imports recovery as well as the hawkish turn of the Fed.” The Philippines‘ trade deficit widened to its biggest level in over two years in September as the country imported more goods than it exported. Imports increased by 24.8 percent to $10.67 billion year on year while exports saw an uptick of 6.3 percent to $6.67 billion.
The trade deficit subsequently hit $3.99 billion that month, the most since January 2019 when it was $4.27 billion and significantly greater than the $2.26 billion posted a year earlier. Year to date, trade gap picked up by 62.6 percent to $29.18 billion from $17.95 billion in January to September 2020.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the major support for the peso-dollar exchange rate in December was P48.90-49.30:$1.
The next significant obstacle is P50.50-50.70:$1, he added.
“Important resistance: 51.00-51.50 levels as seen at the early part of the pandemic last year (March 2020), which serve as the next important hurdle vs. further upside potential; while also taking into consideration the fact that the overall economy still remains below pre-Covid levels at the moment,” Ricafort continued.
Lastly, Japan-based MUFG Bank Ltd. said a seasonal rise in remittances “should help mitigate downward pressures on the peso driven by prospects of US dollar strength as market expectations of an accelerated QE (quantitative easing) taper and earlier rate lift-off by the Fed mount.”
Source: https://www.manilatimes.net/2021/12/03/business/top-business/peso-to-end-2021-weaker-analysts/1824544