Em­bat­tled Philip­pine peso looks to re­mit­tances to res­train slide

Iran Daily - - Tse & Global Economy -

The em­bat­tled Philip­pine peso needs a break and it may soon get one.

More than 10 mil­lion over­seas Filipinos are pre­par­ing to send record amounts of money home for the Christ­mas and New Year hol­i­days — a pe­riod when re­mit­tances pick up — with an­a­lysts from MUFG Bank Ltd. and Stan­dard Char­tered Plc say­ing those funds will help ease pres­sure on the cur­rency, ac­cord­ing to Bloomberg.

The peso, which this month sank to a 2005-low of 54.14 per dol­lar, strength­ened in the fourth quar­ter last year and in ev­ery De­cem­ber in the past four years. Since 2009, the high­est monthly re­mit­tances value was in ev­ery De­cem­ber and last year’s $2.7 bil­lion in­flow in the month was the largest ever, ac­cord­ing to cen­tral bank data.

“The peso may see some sup­port due to the dol­lar strength seen los­ing mo­men­tum to­ward the year-end and a sea­sonal pickup in re­mit­tances,” said Teppei Ino, an an­a­lyst at MUFG Bank in Sin­ga­pore. The bank fore­cast the cur­rency to trade at 53.75 per dol­lar by the end of the year, com­pared with the Fri­day close of 53.97.

The peso has been caught in the mael­strom en­gulf­ing emerg­ing-mar­ket as­sets with the cur­rency among the big­gest losers in Asia this year, drop­ping more than seven per­cent. Re­mit­tances, which to­taled $28 bil­lion last year, are the na­tion’s largest source of for­eign ex­change af­ter ex­ports.

“Given the bear­ish emerg­ing-mar­kets en­vi­ron­ment and near-term ex­ter­nal risks around trade tar­iffs, we are neu­tral on the peso, but re­main rel­a­tively op­ti­mistic on the cur­rency’s prospects in com­ing months,” Gold­man Sachs Group Inc. an­a­lysts Jonathan Se­queira, Danny Suwanapruti and Andrew Til­ton said in a Sept. 10 note.

They said the peso is still about 10 per­cent un­der­val­ued rel­a­tive to its fair value of 49 per dol­lar, ac­cord­ing to the bank’s GSDEER model, which takes pro­duc­tiv­ity and terms of trade dif­fer­en­tials into ac­count.

Turk­ish Lira Euro Bri­tish Pound Aus­tralian Dol­lar Cana­dian Dol­lar Crude Oil Gold Cop­per 0.1619 1.1630 1.3070 0.7155 0.7674 $68.98 $1198.30 $2.61 Ja­panese 100 Yen Chi­nese Yuan UAE Dirham Kuwaiti Dinar Iraqi 100 Dinar Sil­ver Plat­inum Wheat 0.8932 0.1456 0.2722 3.2949 0.0840 $14.08 $794.80 $511.75

HAN­NAH REYES MO­RALES/BLOOMBERG

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