Philippine Peso Could Soon Exceed P59 Per Dollar, FBS Predicts

With the possibility of crossing the P56.50 threshold in the near term, the Philippine peso is showing signs of potential vulnerability, as per the foreign exchange brokerage firm FBS. If the current trend continues, it could potentially reach, or even surpass, the previous record low of P59 to a dollar, established in October of the previous year.

In a recent response via email, FBS presented an alternative scenario: “Should the peso surpass and manage to maintain above the P56.50 mark, it could see a movement towards an all-time high of P59.20.”

However, FBS also emphasized a more positive outcome where the Philippine peso could gain strength if it settles within the P50 to P52 per dollar range. It has been a while since the peso value has fallen to P56.50. The last time this happened was when it closed at P56.56 on November 29. The lowest record to date is its close at P59 a dollar on October 17.

According to data from the Bankers Association of the Philippines website, the peso closed at P56.05 a dollar on Friday, showing a six-centavo improvement from the previous day. Despite the slight gain, it had a week-on-week decline of 16 centavos, falling from P55.89 on June 2.

Analysts from FBS anticipate that the peso will fluctuate around P56.40 to P56.45 in relation to the dollar. This forecast is based on factors such as inflation rates and the policy decisions implemented by the Bangko Sentral ng Pilipinas (BSP), the country's central bank.

In May, inflation rates dipped to 6.1%, a slight drop from April's 6.6%. Despite this decrease, it is still higher than the previous year's rate of 5.4%. The figure also lies within the central bank's estimated range of 5.8 to 6.6% for the month.

Moreover, May marks the 14th consecutive month of inflation rates surpassing the central bank's target range of 2 to 4% for the year.

Considering the overall data for the first five months, the average inflation rate stands at 7.5%. This figure surpasses the central bank's 5.5% projected average for the year.

The BSP, which has been conducting aggressive monetary tightening measures since May 2022, decided to pause its operations in the past month. Indications from the central bank suggest that the key rate would be held constant for the next two to three meetings. Between May 2022 and March 2023, the BSP had raised policy rates by 425 basis points.

With the Philippine peso on shaky ground and the constant inflationary pressure, the nation is now in the spotlight, waiting for the central bank's next moves and the peso's next turn.

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