Metrobank keeps year-end forecast of P46.50:$1

Written by Erik de la Cruz / Reporter

Tuesday, 22 December 2009 19:44

METROPOLITAN Bank & Trust Co. (Metrobank) still expects the peso to end the year at 46.50 against the US dollar, representing a 2.1-percent gain for the local unit from its end-2008 level of 47.52. After establishing a new 2009 high of 45.855 early this month, the peso has surrendered some of its gains and traded as low as 46.78. But it is widely expected to end the year with a modest gain, recovering from last year’s 13-percent loss. The greenback has clawed back lost ground on speculation the Federal Reserve will raise interest rates earlier than expected as signs have emerged the US economic recovery is gaining momentum. The peso on Tuesday ended at 46.49, near the day’s high of 46.42, after hitting a low of 46.75. It rose 0.4 percent from Monday’s close of 46.67. Traders at Bank of the Philippine Islands, in a weekly note, said the peso was expected to trade between 46.20 and 46.70 this week, probably supported by improvements in imports and trade balance figures for October. The National Statistics Office is scheduled to release the October trade data on Thursday. Metrobank, however, expects the dollar to continue falling in 2010 against the peso and other currencies “as the global economy finds its balance,” echoing the outlook of other local and foreign banking institutions. The peso is expected to settle at 46.00 per dollar by the end of 2010, the bank said in the December issue of its Metro Research Navigator. The peso is expected to continue appreciating in 2010, wrote DBS Bank currency strategist Philip Wee in his report on Asian currencies’ movements in 2009 and possible overall direction next year. Wee maintained his year-end forecasts for the peso of 45.60 this year and 44.00 in 2010 given the widely expected continuing depreciation of the dollar. The local unit is also seen supported by the strengthening external liquidity position of the Philippines. “We see scope for the peso to recoup more of its losses from the global crisis,” Wee said, noting the local unit had already clawed back 38.2 percent of its losses as of early December. “For 2010, the retracement is likely to be deeper at 61.8 percent or 43.90,” he added. Efforts to address the global trade imbalance will weaken the dollar, he said. “The Obama administration’s position on global imbalances is straightforward. To avoid more crises in the future, deficit countries need to save more, while surplus countries need to spend more,” Wee said.