Ink tank: Peso will keep sliding as US economy regains strength

- BY BIANCA CUARESMA @Bcuaresmab­m

THE local currency is expected to lose its value further against the dollar in the coming months, private economists said.

In the latest issue of e Market Call, a quarterly market research by analysts from First Metro Investment Corp. and University of Asia & the Pacific (UA&P), the peso was described as likely to continue its depreciati­on trend in the coming months as the US economy regains strength.

“e peso ended in the red in June as demand for imports improved, translatin­g to higher dollar needs. Meanwhile, the US economy’s strong recovery and the Fed’s less dovish statements drove the dollar’s strength causing a 0.4 percent peso depreciati­on month-onmonth after rallying for two consecutiv­e months,” the report read.

e local currency averaged to P48.13 to a dollar from P47.96 to a dollar in the previous month. Meanwhile, the peso’s volatility measure widened by 11.5 percent.

“We think that peso weakness will continue to persist given that the actual foreign exchange rate had already broke through the 200day and 30-day moving averages [MA] as the trade deficit has surged due to the more than 100-percent increase in imports, while the US economic recovery exceeds expectatio­ns,” the report read.

Data from the Bankers Associatio­n of the Philippine­s (BAP) showed that the local currency closed Wednesday’s trade at P49.75 to a dollar, weaker than Tuesday’s close of P49.61 to a dollar. e total traded volume during the day was at $1.04 billion.

Just last week, the Bangko Sentral ng Pilipinas (BSP) shrugged off worries on the recent depreciati­on trend of the local currency, saying structural foreign exchange flows to the country are expected to remain strong in the coming months.

“While short-run fluctuatio­ns in the peso are affected by market sentiment, its medium- to long-term movements are largely supported by economic fundamenta­ls,” BSP Governor Benjamin Diokno earlier said.

“Looking ahead, we expect the peso to be supported by structural foreign exchange flows such as overseas Filipino remittance­s, business-process outsourcin­g receipts and eventually by earnings from tourism activities. Furthermor­e, foreign exchange inflows related to foreign direct investment­s are also expected to help shore up the currency,” he added.

 ??  ?? BSP Governor Benjamin Diokno
BSP Governor Benjamin Diokno
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