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Philippines: Peso may soften back to P48:$1 territory in June
The Philippine peso may return to the weaker P48 to US dollar territory in June as the economy continues to open up, according to bank analysts.
Union Bank of the Philippines chief economist Ruben Carlo Asuncion said the peso-dollar exchange rate has a negative bias, with a forecast of P48 to P48.50:$1 for next month.
“[T]he USD (US dollar) faces more pressure because of the expectations on US economic recovery prospects and sentiment due to vaccine rollout development and current efforts to re-open the world’s biggest economy,” he said.
“Upbeat PSEi, together with further easing of the lockdown in the NCR Plus, bodes well for the PHP (Philippine peso). We’ve seen corporate demand improving and may put more downward pressure on the PHP,” Asuncion added.
NCR Plus covers the National Capital Region (NCR),Bulacan, Rizal, Laguna and Cavite.
The Philippine Stock Exchange index (PSEi) ended the trading week at 6,674.51, up 0.14 percent, or 9.37 points.
The lockdown status of NCR Plus has also been lowered to a more relaxed general community quarantine.
For his part, Bank of the Philippine Islands Vice President and lead economist Emilio Neri Jr. said, “We may see a return to the P48.20 to P48.30 level, if not higher in June as pent up spending accumulated during the ECQ (enhanced community quarantine) period could translate to a lumping of imports midway through the year.”
Meanwhile, Rizal Commercial Banking Corp. chief economist Michael Ricafort said major local leads for the peso include the cental bank’s upcoming domestic liquidity and bank lending data, manufacturing Purchasing Managers’ Index, inflation rate in May, any additional measures to reopen the economy, the trend in new coronavirus disease 2019 cases, and a new vaccination strategy by the government.
“On external factors, most of the upcoming US economic data expected could still show some recovery from previous levels, as highlighted by the latest US jobs/employment data,” he added.
Lastly, ING Bank Manila senior economist Nicholas Antonio Mapa believes that in the meantime, the peso would follow the lead of the US currency.
“PHP [is likely to be] driven by corporate demand as well as general dollar strength or weakness globally. In terms of data, next week we get local inflation as well as US non farm payroll data, which could give traders some added direction,” Mapa said.
The peso closed the last trading day of December and 2020 at P48.02 against the United States dollar, its best finish in more than four years.
For this year, the government has a peso-dollar exchange rate assumption of P48 to P53.
Source: https://www.manilatimes.net/2021/05/31/business/top-business/peso-may-soften-back-to-p481-territory-in-june/1801334