Peso to hit 45.21:$1 in Q2

MANILA, Philippines—The peso is seen settling at 45.21 against the US dollar by the end of the second quarter as monetary authorities take steps to curb the local currency’s continuing “appreciation bias,” according to a joint research by First Metro Investment Corp. and the University of Asia and the Pacific.

“The peso will continue to have an appreciation bias in the second quarter due to robust exports, remittances [from overseas Filipinos], and a surge in portfolio capital inflows as global fund managers return to emerging markets,” the study said.

“However, the [Bangko Sentral ng Pilipinas] will restrain the appreciation by building up its international reserves further and avoid making foreign exchange losses,” it added.

Export earnings for the January-March quarter grew by 7.8 percent to $12.2 billion from $11.3 billion, data from the National Statistics Office showed.

OFW remittances grew 6.9 percent to $3 billion in the first two months, the BSP reported earlier.

Also, the BSP said a net inflow of foreign portfolio investments was recorded in April, reaching $673.8 million, or 221 percent higher than $210 million in the same month last year.

Further, the country’s gross international reserves grew to $67.8 billion as of end-April, growing by 3 percent from the previous month’s level.

The FMIC and UA&P study also said that demand for long-tenor Philippine debt paper may gradually rise as emerging markets make a comeback when demand for US bonds wane if Washington does not curb its high fiscal deficit.

The paper explained that the likelihood for such scenario is boosted by inflation continuing to fall below earlier expectations.