The peso is expected to remain stable this year as the country’s solid macroeconomic fundamentals shield it from volatilities, an economist said Tuesday.
ING Bank Manila senior economist Joey Cuyegkeng, however, revised his peso exchange rate forecast to around 47.50 per US dollar by yearend from an earlier estimate of 46.60. The peso closed at 48.245 against the greenback, near a seven-year low, Tuesday.
“The Philippine peso’s weakness in September [of] around 4 percent is said to be the worst in 16 years or since 2000. This reminds us of political events in 2000. At that time Philippine peso weakened quite significantly [by 21 percent from August 2000 to early January 2001 or by as much as 36 percent from March 2000 to early January 2001],” Cuyegkeng said.
He said the very weak peso then reflected a full-blown political event or risk. “Economic fundamentals now are more robust with record high foreign exchange reserves covering more than 13 months of merchandize imports of more than four times short-term FX liabilities, OFW remittances are at $25 billion or more now while additional sources of US dollar come from a fast growing outsourcing sector,” he said.
He said economic growth this year was expected to remain around 6 percent and the political environment was far from that which prevailed in 2000. “Thus a 56 exchange rate seems quite unlikely,” he said.