Report: Peso to remain weak as exports endure headwinds

MANILA, Philippines — The peso is expected to remain weak due to headwinds that pushed exports down and roiled uncertainties in the market.

That was the assessment gleaned from First Metro Investment Corp. and UA&P Capital Markets Research’s “Market Call” released Friday.

“With exports still ailing from the global economic slowdown, the peso will likely remain slightly weak,” the report read.

As it is, the peso-dollar exchange rate struggled in May as it inched down 0.7% month-on-month. Analysts at FMIC and UA&P noted that the local unit averaged P55.728 against the greenback in May, depreciating for the third straight month.

The peso’s weakness dominated headlines in 2022, as it sank to record lows towards the third quarter owing to the US’ aggressive interest rate hikes. That meant companies and firms passed on this burden to Filipino consumers since they needed to spend more to keep business churning.

That said, the report spotlighted that Philippines exports hit their lowest level in three years, plunging 20.2% year-on-year to $4.9 billion in April. The struggles were heightened by the global economy slowing down.

Analysts at FMIC and UA&P said that even if exports remain weak, the trade balance should ease in the second quarter.

“While exports may remain weak, the overall trade deficit should decline in Q2-2023 from last year, and so the external sector may have a slightly positive contribution to GDP growth in Q2,” the report added. — Ramon Royandoyan