Within the next twelve months, the Philippine peso, which last week weakened to 41.690 against the US dollar, is expected to bounce back and appreciate to as high as 37.50.
This is the projection made by Goldman Sachs, a global investment bank and securities firm, in a briefing held last week.
The investment bank made the forecast on the basis of a “likely surge in foreign portfolio investments” in the Philippines and other emerging economies in Asia.
Goldman Sachs Executive Director Mark Tan said that the Philippines, together with its neighbors, would attract more foreign “hot money” on the back of rising global liquidity and optimism on Asia.
The peso, along with other Asian currencies, weakened last week against the green buck due to investors’ risk aversion, brought on by uncertainties in the global economy.
The peso and other emerging market currencies began to depreciate after the minutes of the latest meeting of the US Fed officials was released which hinted that the ongoing US stimulus program may soon end.
Meantime, the Bangko Sentral ng Pilipinas (BSP) said the improving outlook in the United States should be viewed positively because a strong US economy would benefit the entire global economy.
“Offhand, an early normalization of monetary policy in the United States should always be a welcome development. It means the outlook on the US economy is improving,” BSP Deputy Governor Diwa Guinigundo said.
BSP Deputy Governor Diwa Guinigundo said the BSP is closely monitoring developments and is ready to implement policies necessary to ensure that the domestic financial markets would remain stable.
The Bangko Sentral ng Pilipinas earlier reported that net inflow of foreign portfolio investments reached $2.1 billion in the first four months of the year, nearly three times the $766 million seen in the same period of 2012.
Photo: “<a href=”http://www.flickr.com/photos/24294133@N03/4231428955″>NINOY AQUINO PHILIPPINE PESOS</a>” by <a href=”http://www.flickr.com/photos/24294133@N03/”>Michael</a>, c/o Flickr. <a href=”http://creativecommons.org/licenses/by/2.0/”>Some Rights Reserved</a>