Peso forecast to breach 40 to $1 in 2013

Singapore bank bullish on PH, sees growth exceeding 5%

A+
A
A-

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.

Disclaimer: The comments uploaded on this site do not necessarily represent or reflect the views of management and owner of INQUIRER.net. We reserve the right to exclude comments that we deem to be inconsistent with our editorial standards.

  • ryq24

    you know what that means! peso will fall next year!

    • http://twitter.com/erncastillo ern

      ignorant! A lower exchange rate means appreciation or a stronger peso. It means you need less peso to purchase imported  items specially raw materials for manufacturing, and less peso to pay foreign debts.

      Of course it will lead to more expensive export items. What is important is to keep up with demand and produce more. This can be done with quality products and strong market presence abroad. Producing more also means manufacturing/industrial expansions leading to more jobs. Profitability leads to higher wages. When that happens, the need to import  labor/workers is not far. OFWs may choose to come home because salaries will be higher.

      • Internecine2012

        He is not ignorant. He is stupid.

To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.

Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:

c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City,Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94

editors' picks

advertisement
advertisement