ING eyes PHP to average at 49.70 in Q1 ’17

An economist of ING Bank forecasts the peso to sustain its depreciation until the first quarter of 2017, partly due to rising imports.

Philippines' imports remain generally on positive growth because of rising domestic demand, with the October figure up by 5.9 percent year-on-year. This development requires higher dollar requirement, thus, weakening the local currency.

In a research note dated Nov. 9, 2016, ING Bank Asia chief economist Tim Condon said depreciation of the peso is also impacted by the "re-pricing for the negative swing in the current account balance."

"ING's first quarter 2017 USD-PHP forecast is 49.70," he said.

The peso opened Friday's session at 49.78 and traded between 49.83 and 49.75 as of 2:30 pm.

The Philippines has been posting current account surpluses for more than a decade now due to dollar inflows from remittances, the business process outsourcing (BPO) sector and foreign investments, among others.

However, growth of remittances has slowed down to around four percent from about eight to 10 percent in recent years.

As of September 2016, growth of cash remittances rose by 4.8 percent to USD22.11 billion.

The country's current account surplus declined by 85.2 percent in the first half of 2016 to about USD800 million.

The Bangko Sentral ng Pilipinas' (BSP) current account assumption for this year is a surplus of USD5.8 billion.

Source: Philippines News Agency

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