MANILA – The peso could weaken to P51 to the dollar next year and P55 in 2018, as policy tightening in the US drives funds out of emerging markets like the Philippines, UBS said.
The peso touched the P50-per dollar level twice in the last two months. It weakened to P49.835 in intra-day trading Tuesday.
“We look for USDPHP (Philippine peso) at 51 in 2017 and 55 in 2018,” UBS said in a research note, citing a sharp deterioration in the current account over the last four quarters.
Economic growth is also expected to slow in 2017 due to the lack of election spending that caused gross domestic product to expand by as much as 7.1 percent this year, UBS said in a research note.
UBS said the economy could grow by 5.6 percent next year and 6 percent in 2018.
Anticipating delays, UBS said a boost from planned record spending on infrastructure would not be felt until 2018.