“Fundamentals were more domestically supported and externally dragged in 2022. There may be some partial reversal in 2023. A more balanced current account outlook and some potential easing in inflationary expectations are likely supportive of some peso stability in 2023,” MUFG Global Markets Research said in a report on Friday.
However, it sees the peso rebounding to P55.50 against the greenback by the end of the third quarter. It expects the local unit to end 2023 at P54.50. “We see slight improvements from the services and secondary income balances, due to expected growth in the business process outsourcing and overseas foreign workers’ remittances. At the same time, the reduction in import bills as food and energy prices come off will also likely reduce the merchandise goods’ deficit from the trough of 17.6% of GDP in Q1-2022,” it said.
This could lead to more rate increases from the Bangko Sentral ng Pilipinas , which would support the currency, it said.
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