Government expects peso to be at P52-55:$1 from 2019 to 2022
MANILA, Philippines — More pain may be ahead for the Philippine peso.
After its 174th meeting on Tuesday, the Cabinet-level Development Budget Coordination Committee now expects the peso to average P52.5-53 against the dollar this year from its previous assumption of P50-53.
For next year until 2022, the local currency is seen averaging P52-55 versus the greenback, weaker than the previous estimate of P50-53.
The weak peso has been contributing to rising domestic inflation, which soared to its highest level in nearly a decade in August. The depreciating local currency has also pushed up prices for imported capital goods, posing a challenge to the Duterte administration’s multi-trillion peso infrastructure program.
The peso’s weakness can likewise drive up the value of the national government’s foreign loans.
Also on Tuesday, the DBCC cut their 2018 growth forecast for the economy amid high inflation, which they expect to remain elevated this year before easing in 2019.
“We have revised the government’s medium-term macroeconomic assumptions for 2018 to 2022 to reflect developments at the national and global level, including higher world oil prices, tightening of monetary policy in advanced economies, and higher domestic inflation,” the DBCC said.
Currency weakness is a concern for the Bangko Sentral ng Pilipinas, which is also wrestling with soaring inflation. Last month, central bank governor Nestor Espenilla, Jr. said monetary authorities are rushing prudential measures to curb speculation in the foreign exchange market.
On Tuesday, the peso closed at P53.96 against the dollar, 12 centavos stronger than its previous finish of P54.08.
Some analysts say the local unit may see more hiccups but will likely take a breather in the upcoming Christmas season due to expected influx of remittance from Filipinos abroad.
The BSP has forecast remittances to grow 4 percent this year.
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