SHOULD the peso continue to weaken next year and do beyond the P50-level, a local bank official cautioned that this could hurt fixed-peso income Filipinos.
Cebu Bankers Club (CBC) immediate past president Maximo Rey Eleccion said the peso earners are the most vulnerable sectors amid the current state of the exchange rate, while families of overseas Filipino workers will find the situation to their advantage.
When the dollar strengthens and the peso weakens, the prices of goods, particularly imported items, go up.
UK-based creditor HSBC earlier this month said in its Currency Outlook report that it forecasts the US dollar-peso exchange rate to reach 49.4 at yearend 2016 and 50.7 by the end of 2017.
The same trend, said HSBC, is also happening among emerging market currencies.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo earlier traced this to demand for dollars for debt servicing as the year closes, higher dollar inflows and concerns on the Federal Reserve rate hike, as well as the uncertainties on the economic and immigration polies under the Trump administration.
In addition, the rate hikes in the US also pose a challenge to the Philippine banking sector, said Eleccion. Just this month, US Fed chair Janet Yellen announced a 25 basis-point hike. The local bank official said that this would spell a higher interest rate, not only in deposits, but also for loans.
Generally, this was a good year for the banking industry given the low interest rates and dynamic domestic consumption, as more people availed themselves of car and home loans, Eleccion said.
To address the increasing demand in the countryside, commercial banks have also expanded to the northern and southern parts of Cebu, he added.
Security remains a big challenge for the banking industry. Eleccion said that banks have deployed roving security personnel on their motorcycles who check on their branches 24/7.