By: PNA
An analyst forecasts the Philippine peso to weaken beyond the government’s 48-50 target range for 2017 but considers this as still okay as long as depreciation is not beyond 10 percent.
Emilio S. Neri Jr., vice president and lead economist of Ayala-led Bank of the Philippine Island (BPI) projects the peso to end the year at 52.50, way beyond the range set by the country’s economic managers.
By end-2018, the economist projects the peso to be at the 54-level to a greenback.
Neri has repeatedly said that a 52 to a dollar level for the local currency this year and beyond is not bad at all because this will make the local unit more competitive against the other currencies.
“We think (that) as long as annual depreciation is less than 10 percent it’s ok as it will unlikely lead to unmanageable inflation,” he told PNA in an e-mail message.
In the first half of 2017, rate of price increases averaged at 3.1 percent, slightly above the mid-point of the Bangko Sentral ng Pilipinas’ (BSP) two to four percent target range for 2017-20.
Last June alone, inflation decelerated further to 2.8 percent from month-ago’s 3.1 percent and after peaking so far this year at 3.4 percent last March and April.
The central bank continues to see manageable inflation ahead, with the 2017 figure seen to average at 3.1 percent and lower to three percent in the next two years.
Traders have said that central bank’s presence in the foreign exchange market is seen as if the peso is depreciating.
Philippine monetary officials said it does not meddle with the foreign exchange rate in the country given its market-determined exchange rate policy although the BSP joins in the trading but only to address extreme volatility.
This foreign exchange operation is among the reasons for the decline in the country’s gross international reserve (GIR).