Peso to go back to P41:$1 territory in April, May

by Kathleen A. Martin,

Posted at Mar 20 2013 03:59 PM | Updated as of Mar 21 2013 06:32 AM

MANILA, Philippines -- The Philippine peso is expected to average within the P41 to the greenback in April and May, slightly depreciating from the previous months as the central bank implements more actions curbing the currency's appreciation.

"BSP (Bangko Sentral ng Pilipinas) and other government officials have become wary of the peso appreciation and appear ready to apply stronger means to curb the negative impact of large portfolio capital inflows," the First Metro Investment Corp. and University of Asia and the Pacific said in the latest issue of Market Call.

"Due to BSP and other government actions, we do not expect further appreciation of the peso in Q2 (second quarter). Rather, it may actually start off on a mild depreciation mode as foreign investors pull out profits especially in Q2 to pay off their income taxes," FMIC and UA&P stressed.

From an expected average of P40.96:$1 in March and an actual average of P40.67:$1 in February, the peso is forecast to average P41.17 to a dollar in April, and P41.67 against the greenback in May.

"While the peso may have an appreciation bias due to robust portfolio investments inflows, we are expecting that the BSP will be more aggressive to stem this appreciation," FMIC and UA&P said.

Last year, the peso has strengthened almost 7% against the dollar, cutting revenues of the export industry and the business process outsourcing sector, among others. The appreciation streak of the local currency has also hurt families dependent on remittances from overseas Filipino workers, thus, reducing their spending power.