In a press conference, members of the inter-agency Development Budget Coordination Committee said they changed their peso-dollar rate forecast from the previous P49-P52 given the “fiscal stimulus” in the US that could spur outflows.
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Government sees peso at 50-53:$1 until 2022
Ian Nicolas Cigaral (philstar.com) - April 24, 2018 - 6:59pm

MANILA, Philippines — The country’s policymakers on Tuesday said they expect the Philippine peso to trade at a range of P50 to P53 against the dollar this year until 2022 amid the normalization path taken by the US Federal Reserve.

Nonetheless, adjustments in the foreign exchange assumption were “not very large,” they said.

In a press conference, members of the inter-agency Development Budget Coordination Committee said they changed their peso-dollar rate forecast from the previous P49-P52 given the “fiscal stimulus” in the US that could spur outflows.

“For the exchange rate, our view is that given the last fiscal stimulus in the United States... therefore, there will be some, clearly, movement of money to the United States,” Bangko Sentral ng Pilipinas Monetary Board member Felipe Medalla said.

READ: Philippines is 3rd top remittance receiving country in the world

The central banker then said it is unlikely for the local currency to strengthen at P49-per-dollar level, citing “high level of economic growth” that could pump up capital expenditures growth and boost imports.

“For planning purposes, it is best to think that the current rates are more or less the ‘new normal.’” Medalla added.

The peso, which is already dubbed the worst performing currency in Asia so far, closed at P52.32 against the dollar on Tuesday, 0.08 centavos weaker than Monday’s P52.24 finish.

The Philippines had finished 2017 posting its largest ever annual trade deficit, putting pressure on the already weak peso.

Meanwhile, the DBCC kept its economic growth target for the next four years at 7-8 percent.

The top-level budget body also tweaked borrowing mix for 2018 despite the anticipated slide of the peso, raising external financing to 35 percent, while 65 percent will come from local sources.

For 2019 until 2022, the government will adhere to a 75-25 percent mix, in favor of domestic borrowings.

“[This will] allow the Philippine government to take advantage of the foreign loans which are of course advantageous also on our part because of lower interest rates,” Budget Secretary Benjamin Diokno said in the same press conference.

DEVELOPMENT BUDGET COORDINATION COMMITTEE PESO PESO DOLLAR RATE
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