MANILA – The peso could slide further against the dollar after hitting its lowest level in a decade due to robust imports and as rising borrowing costs weaken emerging market currencies, analysts said Thursday.
The peso closed at P50.53 to the dollar today, from P50.50 on Wednesday.
A slowdown remittances could put additional pressure on the peso, which could hit P51.50 by the end of the year, said AB Capital securities analyst Migs Lopez.
In the next 12 months, the peso could weaken to P52.50 if the country’s current account surplus continues to decline, said Divya Devesh, currency analyst at Standard Chartered.
The current account is the Philippines’ “Achilles heel,” Devesh told ANC’s Market Edge with Cathy Yang. It has deteriorated “quite meaningfully” due to strong imports, he said.
Devesh said foreign direct investments have not been enough to make up for the rising import bill.
Recent statements from the Federal Reserve, the European Central Bank and the Bank of Canada that pointed to higher interest rates have caused emerging market currencies like the peso to slide, Devesh said.
The peso was the worst performing emerging market currency in the region on Wednesday.