MANILA, Philippines—The peso is expected to rise further to 40 against the greenback by year’s end as dollar inflows remain strong, with $19 billion from overseas Filipinos alone, according to Barclays Capital.
The investment bank said in a new research note on the Philippines that rising deployment of overseas workers and robust growth in regional economies have kept remittances on a strong footing.
Documents from the Bangko Sentral ng Pilipinas showed that remittances in the first 11 months of 2010 reached $71.1 billion. (See related story in this section.)
“We expect the trend of rising remittances to continue in 2011, supporting the current account, which faces some downside risks from rising energy prices,” Barclays Capital said.
“In the short term, the outlook for [the peso] remains more clouded, with the US dollar benefiting from favorable economic data surprises and rising US treasury yields,” it said.
The bank added that its outlook for the peso was also an integral part of its recommendation for long-dated Philippine global peso bonds.
Earlier this month, the government raised about P54.77 billion, or $1.25 billion, through the sale of 25-year global peso bonds, the Philippines’ second such outing in four months.
In an earlier research note, Barclays Capital said the continued rise in export earnings was shoring up prospects for the peso.
In November, Philippine exports grew 11.2 percent year on year, slower than the upwardly revised 27.4-percent jump in October.
“The balance-of-payments [BOP] surplus up to November 2010 was $13.6 billion, which we think could have easily reached $14.5 billion for the year as a whole, providing a solid fundamental backdrop for the (peso),” Barclays Capital said.
A country’s BOP is a record of all monetary transactions between itself and the rest of the world.
“For 2011, we expect the BOP position to remain solid, supported by $19 billion worth of remittances,” the bank added.
Article source: Source: http://business.inquirer.net/money/topstories/view/20110117-315021/Peso-forecast-to-rise-to-401
Image source: http://www.internetphilippines.com/finance/new-philippine-peso-bills/