The Philippine peso would probably breach its weakest level of PHP 59 a dollar hit in October last year if it continues to weaken to PHP 56.50 in the short term, according to foreign exchange brokerage FBS.
“In the less likely scenario that the price breaks and holds above the level of P56.50, the price may move to a historical high of PHP 59.20,” it said in an e-mailed reply to questions.
On the other hand, the peso could appreciate further if its PHP 50 to PHP 52 a dollar, FBS said.
The peso has not hit PHP 56.50 a dollar since its PHP 56.56 close on Nov. 29. It closed at an all-time low of PHP 59 a dollar on Oct. 17.
The local currency closed at PHP 56.05 a dollar on Friday, six centavos stronger than a day earlier, data from the Bankers Association of the Philippines’ website showed.
Week on week, the peso declined by 16 centavos from its PHP 55.89 finish on June 2.
FBS market analysts expect the peso at PHP 56.40 to PHP 56.45 against the dollar, based on inflation and policy decisions of the Philippine central bank.
Inflation slowed to 6.1% in May from 6.6% print in April, but still faster than 5.4% a year earlier. It was within the central bank’s 5.8-6.6% estimate for the month.
It was also the 14th straight month that the rate breached the central bank’s 2-4% target for the year.
For the first five months, inflation averaged 7.5%, still above the BSP’s 5.5% forecast for the year.
The Bangko Sentral ng Pilipinas (BSP) paused its aggressive monetary tightening last month and signaled it would put the key rate on hold at its next two to three meetings.
The central bank raised policy rates by 425 bps from May 2022 to March 2023.
The Monetary Board will review policy on June 22. — Aaron Michael C. Sy