Peso may rise to P44 per dollar this year — Barclays

The peso may strengthen to P44 per dollar this year as a result of the country’s strong payment position, higher exports and more money sent home by Filipino workers overseas, investment bank Barclays Capital said. Barclays Capital regional economist Prakriti Sofat said the bank was maintaining its exchange rate forecast despite uncertainties posed by the May 10 national and local elections. "Strong exports together with healthy remittance inflows will continue to support the balance of payments and create a supportive backdrop for the Philippine peso," she said. She added that the central bank was likely to intervene in the foreign exchange market to protect the competitiveness of exporters. "Note, however, that some segments of relatively labor-intensive manufacturing exports, including toy makers, are demanding currency market intervention and state aid as they are facing stiff competition in the international markets, and the strength of the peso is not helping," she said. The central bank expects the peso to average between P46 and P49 per dollar this year. "We believe the central bank will continue to finely balance the need for a stronger currency to keep a lid on imported inflation and the dampening impact of a stronger currency on remittances in local currency terms (and by extension, consumption spending)," Barclays said. The central bank expects the balance of payments to post a surplus of $3-$4 billion this year from $5.3 billion last year. At the end of February, the payment position — the difference between foreign exchange inflows and outflows — was a surplus of $1.11 billion, or half the $2.2 billion surplus a year earlier. Meanwhile, its expects money sent home by Filipinos abroad to increase by six percent this year from a record $17.35 billion last year. Remittances grew by 8.5 percent to $1.372 billion in January from a year earlier. The peso gained 6.5 centavos to P44.675 against the greenback on Tuesday, as the government reported export growth for the fourth straight month in February. — NPA, GMANews.TV