MANILA, Philippines - UBS on Friday said it expects the Philippine peso to average at a stronger level this year, amid the country's rosy economic prospects.
UBS economist Edward Teather said the peso is forecast to average P39.5:$1 this year, a revision from the earlier expectation of P40:$1.
The bank made its revision after Philippine gross domestic product (GDP) growth accelerated to 6.8% in the fourth quarter last year, bringing full-year expansion to 6.6%.
Also as a result of the faster-than-expected 2012 GDP data, the bank has raised its 2013 economic growth forecast for the Philippines to 6.3% from a previous estimate of 4.5%.
"Easy financial market conditions, election spending and a recovery in global trade momentum promises support to the elevated pace of growth in the immediate future," Teather said.
The robust economic growth is expected to allow the Bangko Sentral ng Pilipinas to keep policy rates on hold, Teather noted.
"We expect no further easing of monetary policy and believe ongoing strong growth could prompt a normalization of interest rates later in the year. Any increase in policy rates will be modest, however, due to the central bank’s concerns on foreign capital flows," he stressed.
The country's 2012 GDP growth breached government's 5% to 6% target. For this year, the government hopes to grow the economy by 6% to 7%.