Peso underperformance likely to continue - MUFG

The Philippine peso may continue to underperform against the dollar this quarter amid the country’s wide current account deficit and expensive foreign exchange (FX) valuations, Tokyo-based MUFG Bank said.

- KEISHA TA-ASAN

It sees the peso at 56.20 per dollar by the end of the first quarter and forecasts the peso to close at 55.80 in the second quarter, 55.30 in the third and 55 in the last quarter.

The peso was roughly unchanged against the dollar last month, closing at 56.20 against the greenback on Feb. 29 from the 56.275 close on Jan. 31.

“We expect modest underperformance in the peso, with a better macro trajectory offset by a still meaningful current account deficit and expensive FX valuations,” the bank said.

The Bangko Sentral ng Pilipinas (BSP) earlier reported a current account deficit of $10.9 billion in the January to September period last year, equivalent to 3.5 percent of gross domestic product (GDP).

The current account is a record of the country’s transactions with the rest of the world.