Peso forecast to breach 40 to $1 in 2013
Singapore bank bullish on PH, sees growth exceeding 5%
By Ronnel W. DomingoPhilippine Daily Inquirer
THE PESO is expected to sustain its strong position throughout 2013, when it is seen breaching the 40:$1 level, according to DBS Group.
The financial service provider, in its latest quarterly report on market strategy for the first quarter of 2013, noted that the Philippines “emerged from the eurozone crisis better than many of its Asian peers.”
“The country was rewarded not only with the best-performing stock market and the second-strongest currency in the region, but also two credit-rating upgrades in 2012,” DBS said. The latest upgrade was from Moody’s Investors Service, which brought the Philippines’ foreign and local currency long-term bond ratings to Ba1 with a stable outlook.
Moody’s cited sustained economic growth, strengthening external payments position, improving fiscal dynamics and implementation of governance reforms. With Moody’s move, the Philippines now enjoys ratings from all three major agencies—the others being Standard & Poor’s and Fitch Ratings—just a notch below investment grade.
As of Friday, the peso ended trading at 41.09 against the greenback, weakening from 41 the previous day.
According to DBS, the peso will be trading at 40.40 in the first quarter next year and 40.10 in the second quarter. The local currency will break the 40 level to trade at 39.70 in the third quarter and 39.30 in the fourth quarter.
“The economy is expected to expand (by) more than 5 percent for the second straight year in 2013,” the Singapore-based bank said. “Even so, the Aquino government is focused on achieving higher growth rates in the medium term, one of the prerequisites of winning investment-grade status.”
DBS said that the administration, in aiming to achieve such status, was banking on greater spending on infrastructure through the public-private partnership scheme. “If successful, this will further improve fiscal finances by improving government revenue and lowering the foreign-denominated share of public debt,” the bank said.
“It will also be important to ensure current account surpluses and stable inflation,” it added.
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Tags: Business , exchange rate , Peso
