Peso likely to hit P49:$1 in 2019 —Alpari Research

The Philippine peso is expected to strengthen up to the P49:$1 level this year in light of slowing inflation in the country, Alpari Research & Analysis Limited said Thursday.

“Our view on the peso is very optimistic. The value that we see on the horizon is 49 (to a dollar). This can happen anytime throughout the year, not necessarily only at year-end,” Tomasz Wisniewski, head analyst at Alpari, told GMA News Online.

United Kingdom-registered Alpari specializes in financial market analytical research.

In a separate statement, Alpari said its optimism is buoyed by a slowing inflation in the country after hitting nine-year high of 6.7 percent in September and October 2018.

The peso hit a fresh 12-year low of P54.31:$1 last September, the weakest since the pair closed at P54.425:$1 on Nov. 22, 2005.

“It seems like the worst is over and 2019 is the time for the Philippine peso to shine,” said Wisniewski.

“Philippines has one of the best GDPs (gross domestic product) in the world right now. If we assume that the inflation pressure is over, we may begin to see further strength in the peso,” he added.

Inflation has been on a downtrend, settling at 6.0 percent in November 2018.

The recent drop in global oil prices could also support the peso, especially if WTI crude stays below $60 per barrel as expected, Wisniewski noted.

The dovish stance of the United States Federal Reserve is another factor.

“The recent dovish tone from the Federal Reserve is a positive sign for the PHP. Any hawkish actions by the Fed in 2019 will not be welcomed as the current consensus is rather negative for the USD,” Alpari’s head analyst noted.

The minutes of the Federal Open Market Committee meeting on December 18 and 19 said more rate hikes are expected, but the Fed “can afford to be patient” before tightening policy by a “relatively limited amount.”

“We will be more optimistic towards the Philippine currency when the price falls below 52-USD. Once that level is reached, the road towards 49-USD would be wide open,” Wisniewski said.

The peso closed at P52.86:$1 Thursday, weaker than Wednesday’s close of P52.75:$1. —VDS, GMA News