Peso forecast to settle at 47-48:$1 by yearend

The peso is seen settling at a weaker range of 47-48:$1 amid external volatility, according to Metropolitan Bank and Trust Co. (Metrobank).

“The yearend forecast of P46.80 which we issued last September now appears tenuous given the current level and the ongoing market volatility. More likely the peso may settle between the P47-48 range until yearend given the current breakthroughs at the 47.30 levels,” Metrobank research analyst Pauline E. Revillas said in a note this week.

Revillas noted that “volatility has been more pronounced leading up to the FOMC [Federal Open Market Committee] meeting as investors scramble out of emerging market assets.”

The US Federal Reserve is widely expected to raise policy rates in its Dec. 16 meeting (Dec. 17 in Manila). “After seven years, the US Fed is expected to exit the loose monetary policy it has implemented amid a now stronger economy,” Revillas pointed out.

Revillas nonetheless sees the sustained flows of cash remittances from overseas Filipinos as well as business process outsourcing or BPO revenues to lend support to the peso despite downward pressures.

On Tuesday, the Bangko Sentral ng Pilipinas reported that cash remittances from Filipinos abroad reached $2.23 billion in October—the second highest monthly amount recorded thus far.

For this week’s peso-dollar exchange, Metrobank said “demand from key corporate clients will support the pair at 47, but topside resistance remains near the 47.30 level.”

“Expect volatility as a range of 46.70-47.70 is seen this week,” it added.

As a whole, “[o]ur long-term outlook is still that of relative peso appreciation versus the yearend exchange rate as funds may flow back to the Philippines given the economy’s still strong macro potentials, though market volatility and sentiment will likely keep a dampener on things,” Revillas said.