THE Philippine peso, which ended almost flat to the greenback for the second consecutive day on Wednesday, is not expected to depreciate further despite touching the 59-level in recent weeks.
Citing their economist’s outlook, Corrie Purisima, treasurer and head of Markets and Security of HSBC, during the Makati Business Club’s year-end review and 2026 outlook dubbed “Beyond the Numbers” held in Makati City, said they see the peso averaging at a 58-level this and next year.
“So, (it will be) just about there. We don’t expect it for now to reach 60, and the reason for that is expected lower importations because of the slowdown in infrastructure spending. That should provide some comfort, lower imports, less pressure on the currency,” she said.
The slower importation is projected to be countered by remittances from the business process outsourcing (BPO) sector, which is around US$35 billion to $36 billion, and those from overseas Filipino workers, she said.
“Those continue to be stable forces and provide some currency stabilization,” she said, but noted that pressures remain because of the Bangko Sentral ng Pilipinas’ (BSP) dovish stance for further cuts in its key policy rates, eyed to be 25 basis points next month and another 25 basis points next year.
She, however, noted the upside risks from the US dollar because of lesser probability for the Federal Reserve to cut the Fed Funds rate due to inflation-related factors.
“So, that should balance overall, and we do see it for now ending at 58 for this year,” she added.
Ayala Corp. managing director Karl Chua, during the same event, said it is still a good decision for the BSP to let market forces dictate the path of the local currency.
“I think it is a good policy to keep it at a free flow and to be determined by supply and demand,” he said.
While there will be sectors that will be affected, such as the exporters and importers, “in the end, it is not the nominal exchange rate, in my opinion, it is the real exchange rate adjusted by inflation and productivity,” he added.
Metropolitan Bank & Trust Company (Metrobank) chief economist and market strategist Nicholas Mapa expects the US dollar to remain weak in general until 2026, even with the peso depreciating now, due to the Fed’s rate-cutting cycle.
“Philippine-specific factors, however, should translate to sustained pressure on the Philippine peso as the economy is slated to run a current account deficit in 2026 and 2027,” he added in a statement issued by the bank on Wednesday. / PNA