Peso seen to weaken against US dollar in ’12

The peso is expected to weaken in 2012 although this may be tempered by “a likely credit rating upgrade,” according to First Metro Investment Corp. and the University of Asia and the Pacific.

FMIC and UA&P said in a joint research paper that the local currency’s trading range could average between 43 and 45 to the US dollar this year.

Also, the research partners said the continuing robustness of remittances from overseas Filipinos would counter the downward pressure on the peso.

Citing data, FMIC and UA&P said the peso-dollar exchange rate last month averaged at 43.64 as of Dec. 23, slightly depreciating from 43.27 in November.

This brought the fourth quarter average to 43.44 from the 42.75 reported in the previous quarter. The full-year exchange average reached 43.35, from 45.11 in 2010.

“Except for the reaction to the external crises, the peso was on a strengthening trend for most of 2011,” they said.

“For 2012, we think the US will continue to outperform the euro zone and Japan, and bolster its status as a safe haven. Thus, we think the peso will weaken, but the decline will be tempered by a likely credit rating upgrade, and by the continuing robustness of OFW remittances.”

Even then, FMIC and UA&P said the peso would follow a strengthening direction in the first quarter, trading against the dollar at an average of 43.86 in January, 43.70 in February, and 43.03 in March.