Thursday, September 10, 2015

First Time Since 2010: Exchange Rate for Peso-Dollar Breaches P47:$1 Level

September 8, Tuesday, the foreign exchange rate of PHP to USD hit P47 to $1, for the first time since 2010.

According to Marc Bautista, Metrobank's Head of Research, expectations that the US Federal Reserve will increase interest rates are boosting the greenback and that the Peso's depreciation is not a supply issue.

“Right now, I’m not really worried. This is just the strong dollar story affecting sentiment, but it’s all sentiment-driven, it’s not really being driven by fundamentals,” he told ANC.“We know that fundamentally, the economy is strong. Our gross international reserves are more than enough to pay our external debts in one go, therefore, we have to keep in mind that our external debt is not due and demandable right now, it is spaced out over a couple of years. The thing is, we can pay for that in one go—that’s how much dollars we have. So it’s not really a supply issue, remittances are continuing to come in and we have a strong BPO industry."

Bautista added that peso could even hit P48, but he is expecting to see a "reversal" towards the year end, particularly by the third quarter. He said the peso will likely go back to P46.80 by year end.

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