MANILA, Philippines – Standard Chartered Bank expects the Philippine peso to end the year at P49 to $1.
In the first half of 2016, it could range between P47 and P48, then further weaken in the second half, ranging from P48 to P49.
“We think we are going to see a gradual pressure on the currency this year,” said Divya Devesh, foreign exchange strategist at Standard Chartered.
Devesh pointed to slowing remittances from overseas Filipino workers (OFWs) and equity outflows as potential causes for the expected depreciation of the peso.
The Bangko Sentral ng Pilipinas (BSP) recently cut its 2016 growth forecast for remittances to 4% from the original 5%, citing falling oil prices and the weakening of currencies in OFWs’ host countries.
But Standard Chartered also expects the Philippine peso to remain the most resilient currency in the region because of the country’s strong current account surplus.
The current account is one of the two components in a country’s balance of payments (BOP). The BOP shows a summary of a country’s transactions with the rest of the world, such as trade, foreign direct and portfolio investments, and remittances from OFWs.
“The peso is much more stable than other currencies,” said Marios Maratheftis, Standard Chartered’s global chief economist.
In recent months, worries over China’s economic slowdown and the decline in oil prices have rattled global financial markets.
Maratheftis said oil prices are likely to recover and more than double by the end of 2016. – Rappler.com