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Political woes seen pulling down peso

By: - Reporter / @bendeveraINQ
/ 05:16 AM November 04, 2017

The peso is seen further weakening to 55:$1 next year amid political uncertainty, London-based economic research firm Capital Economics said.

“We expect most Asian currencies to hold up well against the US dollar in 2018, supported by healthy external positions and strong export demand. The main exceptions are those with significant external vulnerabilities (Sri Lanka and Pakistan) and where the domestic political situation may deteriorate (the Philippines and Thailand),” Capital Economics said in its Oct. 31 Emerging Asia Markets Monitor report titled “Asian equities bounce back.”

Capital Economics projected the peso to close this year at the 52:$1 level, before sliding to 55:$1 in 2018 and 2019.

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Data showed that as of end-September, the peso weakened the most compared with other currencies that depreciated against the dollar, including those of Bangladesh, Indonesia, Sri Lanka, Malaysia and Singapore.

In contrast, the currencies of South Korea, India, Taiwan, China and Thailand strengthened against the greenback year-to-date.

The peso slid to fresh 11-year low levels in October, hitting 51.77:$1 on Oct. 25, the weakest since July 25, 2006’s 51.87:$1.

In an earlier report, Capital Economics said “the outlook for private investment is less promising” in the near term due to politics.

“If companies are to invest, they need a stable and predictable business environment. While Rodrigo Duterte has not been the disaster for the economy that some feared, there are signs the new president’s war on drugs, his erratic policymaking style and the worsening security situation in the south of the country is starting to weigh on investment prospects,” according to Capital Economics.

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TAGS: Capital Economics, Peso
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