Peso, EM currencies seen under pressure

The Philippine peso and its emerging-market (EM) peers are expected to retreat against the United States (US) dollar as widening current account deficits leave several economies vulnerable to currency adjustments, according to Capital Economics.

- By RICARDO M. AUSTRIA

In a Dec. 16 report, the London-based think tank's EMs team warned that the stellar outperformance seen earlier this year is unlikely to persist, noting that countries including the Philippines, India, and Poland are particularly exposed to larger foreign-exchange (forex) shifts if trade imbalances continue to grow.

While the latest Bangko Sentral ng Pilipinas (BSP) data showed the current account deficit narrowed to $12.5 billion in the first nine months of the year from $13.34 billion a year earlier, the currency has remained under pressure.

The peso touched a record low of ₱59.22 against the dollar on Dec. 9. Capital Economics now projects the peso will end 2025 at ₱58.9 before weakening further to ₱59 in 2026 and ₱60 by the end of 2027.