MANILA - The Philippine peso is seen to depreciate by 3 to 4 percent against the US dollar this year due to the normalization of US interest rates and China's economic slowdown, Dutch financial giant ING Bank said.
Joey Cuyegkeng, senior economist at ING Bank Manila, said the peso is expected to weaken further to P48.80 to $1 in 2016 after shedding 5.2 percent against the dollar in 2015.
"We are more bearish and expect the Philippine peso to head towards P48.80 this year despite the favorable economic fundamentals," he said.
The local currency shed 5.2 percent to P47.06 to the dollar on December 29, 2015 from P44.72 to the dollar on December 29, 2014.
According to Cuyegkeng, structural inflows will expand between 9 and 10 percent this year.
He noted that depressed Asian currencies will linger this year, citing the interest rate hike in the US, growth concerns in China and emerging market economies, dropping commodity prices, and the heightened credit risks against emerging markets.
"The Philippine peso, like other Asian currencies, posted losses in 2015 but the losses were more moderate. The peso in 2016 would likely be no different from 2015. External factors had a more dominant impact on peso in 2015 even as economic fundamentals have held up relatively better," Cuyegkeng said.