Peso slide to P60 per dollar 'probable'

THE PESO could slide to the P60-per-dollar level amid a dovish central bank and market concerns over corruption issues, analysts said.

- Aaron Michael C. Sy

On Wednesday, the local unit closed at P58.69 versus the greenback, recovering by 44 centavos from the previous day’s record low of P59.13, Bankers Association of the Philippines data showed.

“P60 (per dollar) is probable, but not a done deal. The Bangko Sentral ng Pilipinas (BSP) has the firepower to defend the peso, and our core fundamentals are still solid. What’s weighing us down is uncertainty — especially from the floodgate scandal/tariff uncertainty which caused the dollar to strengthen,” Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message.

MUFG Global Markets Research said in a note on Wednesday that the peso’s depreciation has been more severe than expected.

“While we had already been anticipating some headwinds to PHP (Philippine peso) from a more dovish BSP, coupled with the corruption issues arising from flood control projects, the move in PHP has admittedly been weaker than we anticipated,” MUFG said.

"We were expecting other offsetting positives such as lower inflation, strong private investment including in renewable energy projects, an expected pickup in FDI (foreign direct investment) from the past surge in FDI approvals, coupled with seasonal inflows from remittances to boost the PHP. Admittedly, this has not happened yet," it added.

Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said in a report that the peso depreciation has been driven by high crude oil prices, BSP's dovish stance, net foreign selling in the stock market and the substantial current account deficit.