The more recent gains posted by the local currency against the US dollar was seen sustained up to year-end as external sector developments have turned more favorable for emerging markets that include the Philippines, the Manila unit of ING Bank said.
According to Joey Cuyegkeng, an economist at ING Bank, the lender looks to recast its year-end peso exchange-rate forecast currently set at 46.8 per dollar and at 47 per dollar the following year. The peso gained back what it lost the past week after falling to the 47-per-dollar level earlier in the year due to speculation the US Federal Reserve (the Fed) was not likely to make an interest-rate adjustment just yet.
On Tuesday data from the PDS system show the peso closing the day’s trades at 46.075 per dollar or 27.5 centavos weaker than on Monday, when the closing rate stood at 45.8 per dollar. The total traded volume stood at $984 billion, up from only $773.05 billion the previous day.
“[The Philippine peso], like other Asian currencies, posted another week of strength with the two-week appreciation coming in line with most Asian currencies. [The peso] returned to levels seen before the third-quarter rout of Asian currencies,” Cuyegkeng said.
“Recent external developments have been favorable and could extend to the end of the year and in 2016, especially if the Fed guidance for normalization is extremely more modest than currently expected and that China’s economy grows at 6 [percent] to 7 percent reducing EM [emerging market] risks but raising inflation pressures with commodity prices rising,” he added.