DBCC sees stronger peso in 2024

MANILA, PHILIPPINES — The Marcos administration no longer sees the peso potentially hitting the 58-per-dollar mark this year on expectations of lower imports.

The interagency Development Budget Coordination Committee (DBCC) now projects the local currency to average between 55 and 57 against the greenback this year, better than the previous assumption of between 55 and 58.

From 2025 until the end of the Marcos administration’s term in 2028, the DBCC kept its forecast for the peso at 55 to 58.

The DBCC—which sets the state’s macroeconomic targets for fiscal planning purposes—saw a better outlook on the local currency this year as it also expects the country’s import bill to post a slower growth than previously predicted.

READ: Peso seen weakening to 58 per dollar

In 2024, merchandise imports are seen growing by 4 percent, lower than the old projection of a 7-percent expansion.

For 2025, growth of inbound shipments is forecast to hit 7 percent, before sustaining an 8-percent growth from 2026 to 2028.

“Goods imports are expected to be propped up by investments in public infrastructure,” the DBCC said.

Smaller imports would ease demand for the greenback, thereby propping up the peso.

Keeping an eye on the peso

As it is, the Bangko Sentral ng Pilipinas (BSP) has been keeping an eye on the peso as it contemplates the timing and size of future rate cuts.

Last week, the peso flirted with a five-month low. Such weakness was likely a factor in the BSP’s decision on Monday to keep its key rate unchanged at 6.5 percent, the highest in nearly 17 years.

READ: BSP still ‘hawkish’ but rate cut possible in 2024

Analysts have said the BSP would likely stay in lockstep with the US Federal Reserve to avoid pressuring the peso and stoking inflation, which sizzled to 3.7 percent year-on-year in March, beating the February reading of 3.4 percent.

US central bank officials have also signaled they were willing to wait for a more convincing inflation downtrend before making any easing moves.

But despite the overall hawkish tone of the central bank, BSP Governor Eli Remolona Jr. nevertheless laid out the two conditions for a potential rate cut: a softer inflation and a weak economic growth.