Oxford Economics: Philippine peso resilient from currency crisis

MANILA, Philippines — The Philippine peso has joined currencies of neighboring Asian countries as among those the UK-based Oxford Economics sees as resilient currencies that are unlikely to face a crisis in the near term given strong macro fundamentals.

“Although this year’s survey data on China suggests the worst has passed, the mounting uncertainty about growth in the U.S. and global trade tensions still pose risks to global market sentiments, and more volatility may well be in store for EM [emerging market] currencies,” Oxford Economics said in a report titled “Navigating the next EM currency crisis.”

For Oxford Economics, “despite significant adjustments since last year, the Argentinian peso and Turkish lira are still the two currencies most vulnerable to a renewed downturn in market sentiment.”

The Ukrainian hryvnia was also among the currencies that were “most at risk of a currency crisis or a sharp depreciation,” Oxford Economics said.

On the other hand, the Philippine peso alongside other Asian as well as Central and Eastern European currencies were deemed by Oxford Economics as “most resilient.”

Based on Oxford Economics’ estimates, the Philippine peso only had a 9 percent chance of undergoing a currency crisis in one year’s time, but there was a bigger probability of 25 percent that a crisis may happen in the next three years.

“Asian currencies benefit from a combination of either low inflation and low interest rate differential (Malaysia and Thailand), or very low short-term external debt (India and the Philippines),” it said.

“South Korea, Thailand and Malaysia also stand out for their high and positive current accounts,” it added.  (Editor: Mike U. Frialde)