Peso Expected To Strengthen But Not Long Term – Fitch Solutions

Peso Expected To Strengthen But Not Long Term – Fitch Solutions

Fitch Solutions Macro Research has a positive outlook for the Philippine peso in 2020. It is expected to perform stronger this year but will likely decline in the long term. 

Currently, the peso is expected to average at ₱51.7: $1 this year, which is stronger than Fitch’s earlier forecast of ₱53: $1

In a statement, they said:

Our revision partially reflects a stronger-than-expected starting point for the unit in 2020, but also broad support for Asian FX on the back of a ‘phase one’ US-China trade deal expected to be signed in early 2020.

Fitch Solutions expects that in the first six months of the year, the Philippine peso will trade between ₱50-₱52 for a $1. However, it will slowly depreciate further later in 2020 throughout 2021. They pointed out that the Philippines’ widening current account deficit, rebounding (albeit modest) inflation figures, and downside risks to global growth as the culprit for the depreciation of the peso.

The research company further expounded that a combination of fiscal stimulus and widening current account deficit will aggravate the Philippines’ twin deficit risks, weakening its attractiveness relative to its regional peers Thailand and Malaysia.

 

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