MANILA, Philippines – The Philippine peso will still not get any love as it is expected to slide further to P54 to $1 by year-end, according to Fitch Group’s analytics arm BMI Research.

“The Philippine peso continues to be the worst performing currency in the region, having weakened by more than 7% against the US dollar year-to-date,” said BMI Research on Wednesday, June 27. (READ: Should we worry about the Philippine peso?)

The think tank said the peso is still technically “looking bearish” as headline inflation is still significantly above the Bangko Sentral ng Pilipinas (BSP) current policy rate of 3.5%. 

“In our view, the interest rate is too low for an economy that is expanding by close to 7%, and this concern has also been echoed by bond investors who are demanding higher returns for their expectations of higher inflation,” BMI Research added. 

Inflation reached a fresh 5-year high of 4.6% in May due to higher oil prices in the global market and the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law.

The trade war between the United States and China as well as the sluggish pace of the BSP in keeping up with the US Federal Reserve’s interest rate hikes are also seen as risks for the peso.

“We see the next level of possible backstop at around P53.70 to $1, followed by at approximately P56 to $1 if the support fails to hold,” BMI Research said.

On the upside, remittances from overseas Filipino workers (OFWs) are expected to support the currency. Remittances account for over 10% of the country’s gross domestic product (GDP).

For 2019, BMI Research expects the peso to hover at P54 to the greenback. – Rappler.com