MANILA - The Philippine peso is expected to further weaken this year against the US dollar as the country's current account deteriorates.
Michael Wan, an economist for Credit Suisse, expects the peso to hit 51.80 to the US dollar within 12 months, and 50.80 within three months despite the country's strong economic performance.
"It's true that GDP growth has been very strong, one of the strongest in Asean but we think one big risk is on the current account," Wan told ANC'S Market Edge.
Wan expects the Philippines' current account to fall into deficit for the first time in 14 years.
Current account is the sum of a country's balance of trade (exports minus imports), net income from abroad and net current transfers.
The Bangko Sentral earlier said it expects the country's current account surplus to narrow to $0.8 billion in this year from a projected $2.5 billion surplus in 2016.
But according to Wan, the country is likely to post a current account deficit amid the surge in imports even as exports are expected to take a hit. He particularly cites the mining ban's effects on nickel exports.
Wan also sees income from remittances and business process outsourcing (BPO) at risk amid US President Donald Trump's protectionist bent.
He also noted that the peso is declining even though the US dollar itself is weakening. He said the local currency is underperforming compared to the rest of Asia.
The peso closed at 50.16 to the dollar last Friday.