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Forecast Updates: Stronger dollar, risks to inflation
Donald Trump’s victory in the US presidential elections requires a recalibration of our forecasts.
By Metrobank Research
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A wave of red in the US presidential elections will bolster the dollar.
We have seen that even before the results of the elections were out. With a fresh mandate as president, a Donald Trump win affirms the persistent dollar story, with the dollar spot index at a four-month high of 105.44 a day after the elections.
However, the recent dovish 25-basis-point cut by the US Federal Reserve (Fed), which widens the interest rate differential of the Bangko Sentral ng Pilipinas (BSP) and the Fed, could slightly offset the effects of a stronger US dollar.
With the control of the lower house still in question, Metrobank Research sees two scenarios in the potential movement of the peso, taking into account proposed policies of the new US administration, and the expected support to the peso from incom