Peso exchange rate of P53:US$1 seen in 2019

Philippines - Filipino currency, Peso bank notes - photo by B.Henry

THE Philippine peso reached its lowest level in over 11 years as it closed at P52.34 on Feb. 26.

This was the peso’s weakest level since July 2006 as an analyst warned the local currency could slide to P53 by the yearend following the expected global correction of the US dollar.

Tomasz Wisniewski, chief analyst of Alpari Research and Analysis, said this could happen given the negative influence of the huge money outflow and the Philippine central bank’s steady interest rates and “dovish” inflation estimates.

“Look at the stocks, if major indexes will break, we’re gonna see a major selloff in the markets and emerging markets will be the first to suffer,” he said.

Analysts have also pointed to the surging trade gap driven in part by imports of goods tied to the government’s ambitious infrastructure program.

The trade deficit ballooned to $4.02 billion in December from $3.84 billion in November, bringing the full-year gap to $29.8 billion from $26.7 billion in 2016.

But for BPI lead economist Emilio Neri Jr., economic growth will remain at par with the world’s fastest growing countries despite the peso’s continuing slide.

“We’re very confident that close to seven percent, if not seven percent, growth is very achievable this year,” he said. BPI’s current forecast is 6.8 percent for 2018.