ING Bank Manila expects the peso to close weaker at 54.25 against the US dollar due to the expected wider current account deficit and higher oil prices.
ING Bank Manila senior economist Joey Cuyegkeng said in a report Tuesday the trend of a weaker peso was likely to continue. He said increasing imports reflected strong domestic demand, which would remain strong growing at 8 percent to 9 percent in the next 15 months.
“Accelerated government spending and deficit spending continues to power the economy. High inflation and rising interest rates moderate household and business spending growth. Despite the moderation, we continue to expect import growth to remain high,” Cuyegkeng said.
“Weak export performance is likely to continue. High import growth (on a large base) and weak exports wide the trade deficit and keep the downward trend of the import cover. We have argued previously that structural inflows (which consists of OFW remittances and outsourcing revenues) are now increasingly inadequate to finance the trade deficit,” he said.