Fitch Solutions, a unit of Fitch Group, has lowered its peso-dollar average exchange rate forecast for 2022 to P51.80 from P51, saying the Bangko Sentral ng Pilipinas’ near-term dovish stance, loose fiscal policy and a worsening current account balance outlook will all weigh on the unit.
In a report Friday, Fitch Solutions also factored in the monetary tightening by the US Federal Reserve.
“We at Fitch Solutions maintain our bearish stance on the Philippine peso but now expect the unit to trade even weaker as accommodative policy stances and a worsening current account weigh,” it said.
In 2021, it said the peso spot rate fell 5.8 percent against the US dollar, as the Philippine economy was hampered once again by COVID-19 outbreaks, resulting in policymakers continuing monetary and fiscal support.
“We had expected for further currency volatility and weakness in our last update in September and the unit has depreciated 1.9 percent against the US dollar since then, trading to the weaker end of our P49-P52/US dollar range as forecast,” it said. Julito G. Rada