PPMI sees surge in e-money transfers

The Philippine peso continues to be the worst performing currency in the region, having slipped by 7.0 percent against the US dollar yearto-date, according to a report by a Fitch Group company.

London-based BMI Research sees the peso weakening to P54 per US dollar by the end of 2018.

“Given that technicals and fundamentals on balance are pointing to further weakness, we are revising our forecast for the Philippine peso to end the year around P54:$1, from P51:$1 previously, which will likely take the full-year 2018 average to P52.50:$1, from P51.95:S1 in first half 2018,” BMI Research said in a report.

Ruben Carlo Asuncion, chief economist at Union Bank of the Philippines, espouses the same bearing position on the pesodollar exchange rate.

“I’m expecting it to actually slide further ...”Asuncion told GMA News Online on Friday.

“If trade war tensions and uncertainties continue, the peso is in a lot of downward pressure,” he said.

The local currency weakened by 4 centavos to P53.515:$1 at the close of trading on Thursday, from P53.475 on Wednesday, its weakest in nearly 12 years since closing at P53.550:$1 on June 29, 2006.

“Technically, the Philippine peso is looking bearish after breaking through support at around the P53.20:$1 level,” BMI Research said.

According to BMI Research, the peso remains vulnerable due to negative real interest rates as headline inflation—at 4.6 percent in May—is significantly above the Bangko Sentral ng Pilipinas’ (BSP) policy rate of 3.50 percent.

The central bank implemented two policy rate adjustments this year—in May and earlier this month—each by 25 basis points, to ease rising commodity prices.

“In our view, the interest rate is too low for an economy that is expanding by close to 7 percent, and this concern has also been echoed by bond investors who are demanding higher returns for their expectations of higher inflation,” BMI Research noted.

“While the BSP hiked its benchmark interest rates by a total of 50 basis points in May and June, and signaled that it is prepared to continue hiking to safeguard macroeconomic stability,” it said.

“We forecast another 25 basis points rate hike before end-2018, this is likely to be offset by rising interest rates globally.”

News Online)

(GMA

Philippine Payments Management Inc. (PPMI) expects more industry players to start using Instapay which will drive up the volume of electronic money (e-money) transfers. Instapay, the recently established automated clearing house (ACH), provides the infrastructure for financial institutions, allowing the banking public to have seamless interbank fund transfers.

The self-regulated organization, recognized by the Bangko Sentral ng Pilipinas (BSP) as the Payments System Management Body (PSMB) to implement the National Retail Payment System (NRPS) framework under BSP Circular 980, is looking at over 100 BSPsupervised financial institutions (BSFIs) participating as they move towards increased digitalization efforts.

“There were a total of 20 participants on the day of its launch in April 2018 but only 7 institutions have the capacity to send and receive payments via Instapay. We expect this number to grow to over 100 or at least 90 percent of all BSFIs, as each company ramps up their system readiness to participate,” said Abraham Co, PPMI president.

PPMI recognizes that different financial institutions have different IT infrastructure, adding that “some adopt quickly while others are not as nimble to connect to Bancnet.”

PPMI added that check payments and automated teller machine (ATM) transactions would likely shift to e-money transfers since this is the fastest way to safely move funds, enabling the public initiate real-time payment transactions.

“Significant volumes should shift to this platform within a year’s time. Today, about 75% of checks processed daily are below Php 50,000. Right here is an immediate market for Instapay. E-transfers could also reduce cash transactions which can impact ATM usage,” Co added.

PPMI said that e-money transfers will soon prevail for as long as the banking industry ensures security of the network while participants continue to create financial products.

“The banking public will want to use Instapay because of the userexperience it provides. It is a quick, easy and secure option for money transfers and payments,” said Co.

PPMI sees NRPS to transform the way BSFIs provide financial services to the Philippine market. “There are other use cases in the future that we can provide. We can do countless opportunities from domestic remittances and payment to merchants to cash-out services,” Co said.