Peso expected to remain firm for rest of year

MANILA, Philippines - The peso is expected to remain “firm” for the rest of the year on the back of the country’s strong macroeconomic fundamentals, a Bangko Sentral ng Pilipinas (BSP) official said yesterday.

“We believe that the exchange rate will continue to be firm... precisely because we have a favorable external payments position,” BSP Deputy Governor Diwa C. Guinigundo told reporters.

“We also believe that the surplus in both the current account and the balance of payments will continue and that will provide support in the firmness of the peso against the dollar,” Guinigundo continued.

The peso closed at 43.30 to a dollar on Monday, weaker by more than five percent from its 41.05:$1 finish in end-2012.

“Sooner or later, it all comes down to the fudamentals. If you have more dollars coming in than getting out, the peso will remain generally stable,” Guinigundo said.

The government expects the peso to average between 41 and 43 per dollar this year, a revision from an earlier range of 42 to 45 to a dollar.

Guinigundo noted that the inter-agency Development Budget Coordination Committee (DBCC) may revise assumptions anew before the end of the year.

He said the DBCC will reassess macroeconomic assumptions including for exports, imports, debt to gross domestic product ratio financing mix, and even growth outlook before the year ends.

“I think that will be announced in the next two or three weeks. These include the reassessment of the 2013, 2014 and 2015 assumptions,” Guinigundo said.