The Philippine peso is projected to weaken further, possibly hitting P64:$1 by the end of 2023, according to ANZ Research. Factors such as a large current account deficit and sluggish domestic growth are contributing to this forecast.
Economic Context and Future Outlook
The Philippines’ weak growth and large current account deficit will continue to weigh on the PHP.
ANZ Research
The peso's performance contrasts sharply with other Asian currencies like the Indonesian rupiah and Indian rupee, which have gained stability due to improving investor sentiment. ANZ notes that the Philippine currency is currently the only one among three Asian currencies facing ongoing deficits.
ANZ's report highlights that the weakening peso is exacerbated by high global oil prices and elevated U.S. interest rates. These external pressures have historically led to significant depreciation of currencies in the region.
Despite healthy remittance flows, which cover only about 45 percent of the trade gap, the Philippines remains more exposed than many other Asian economies due to its sizeable current account deficit. This situation complicates the policy decisions of the Bangko Sentral ng Pilipinas (BSP).
The BSP has raised key policy rates to 5.0 percent last month, but ANZ anticipates one final rate hike of 25 basis points as the central bank navigates inflationary pressures and external risks.
The Philippine peso is projected to weaken further, possibly hitting P64:$1 by the end of 2023, according to ANZ Research. Factors such as a large current account deficit and sluggish domestic growth are contributing to this forecast. This situation puts the country in a position where it faces greater risk from U.S. interest rate hikes amid AI gains in Asia.
The Philippine peso is projected to weaken further, possibly hitting P64:$1 by the end of 2023, according to ANZ Research. Factors such as a large current account deficit and sluggish domestic growth are contributing to this forecast.
The Philippine peso is projected to weaken further, possibly hitting P64:$1 by the end of 2023, according to ANZ Research. Factors such as a large current account deficit and sluggish domestic growth are contributing to this forecast.