ING economist expects further weakness of peso as year ends

MANILA — An economist of ING Bank Manila forecasts further weakness for the Philippine peso by year-end on the back of recent depreciation of regional currencies.

“Php (Philippine peso) ending this year below Php 47 is increasingly unlikely,” ING Bank Manila senior economist Joey Cuyegkeng said.

On Monday, the local unit ended the trade at 47.34 from last Friday’s 47.23. It has been weakening due to several factors such as the would-be decision of the Federal Open Market Committee (FOMC) during its policy meeting middle of this week.

Cuyegkeng said currencies in the region were on the defensive since last week also due to economic growth in China as well as the expansion in emerging markets (EMs).

“Aside from monetary and fiscal stimuli, markets have been surprised by the steady weaker fixing of CNY (Chinese yuan) last week,” he said citing that this situation “has been a negative surprise for Asian currencies which revived possible competitive weakening of currencies.”

Another factor to the weakness in regional currencies is the continued drop of commodity prices, with oil posting its multi-year low due in part to the decision of the Organization of Oil Petroleum Countries (OPEC) to maintain production level this year.

Prices of copper, iron ore and steel further went down in the international market due to high supply condition.

Because of these, Cuyegkeng said performance of the local currency has been affected and with the FOMC widely expected to deliver a hike this week, the peso is not expected to recover soon.

He said the local unit showed a median of 47.20 based on Bloomberg consensus early this month while the end-year level is seen at 47.10. (PNA)

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