Peso will likely weaken in Q1 2023, say economists
The peso will likely fall against the U.S. dollar in the first quarter of 2023, averaging between 56 and 57, said Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort.
In a reply to a Manila Standard query, Ricafort explained that the peso’s performance was in line with the movement of other regional currencies such as the Indian rupee, Chinese yuan, Indonesian rupiah, Malaysian ringgit, and Thai baht.
He added that the “still relatively weaker peso” could increase the possibility of further local interest rate hikes amid recent signals from monetary authorities on possibly matching future Fed rate adjustments if inflation remained high.
Meanwhile, economists from First Metro Investment Corp. and the University of Asia and the Pacific said in a joint report that while the peso-dollar exchange rate strengthened in November and December, “this will prove unsustainable.”
“And so expect renewed weakening starting Q1 2023,” they added.
However, Ricafort said that the peso depreciation might have benefitted OFWs and their families, exporters, business process outsourcing, foreign tourism businesses and others that earn in US dollars.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that cash remittances made from January to October increased by 3.1% year-on-year to $26.736 billion. The BSP was expecting remittances to rise four per cent in 2022.
As for inflation, Ricafort noted that any advantage might be offset by higher inflation. The Philippine Statistics Authority (PSA) will release the official December inflation in the first week of January.
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- PH economy projected to grow by 7.4% in 2022 · 29 Nov
- BPO inflows, OFW remittances to prop up peso in Q4 · 26 Oct
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