![]() ![]() The United States, for instance, has been more aggressive in raising interest rates compared to the Philippines. “As major central banks around the world turn increasingly hawkish and continue hiking rates aggressively, capital will likely be diverted away from emerging economies such as the Philippines, and into fixed income assets in developed countries which are considered less risky,” it explained. The Fitch unit also flagged the effect of monetary policy tightening across the globe on the peso’s performance. RELATED: Trade deficit swells to 3-month high of $5B in March The trade balance, which is the biggest component of the current account, also ran on a deficit from January to March.Ī trade deficit, which happens when a country imports more than it exports, contributes to a weaker peso-dollar exchange rate as more dollars are purchased to fund the increase in imports. The country’s current account deficit has widened to 5% of the economy in the first quarter from 3.5% in the last three months of 2021. “We expect the widening current account deficit and deteriorating terms of trade to continue exerting downside pressure on the peso in the near-term,” said Fitch Solutions in its latest commentary. The American think tank said it now sees the peso averaging ₱54.30 this year, weaker than its previous ₱52.30 estimate.įor next year, it projects a ₱56.40 average versus the greenback. Metro Manila (CNN Philippines, July 7) - Fitch Solutions expects the peso to continue performing weakly against the dollar even up to 2023, revising its forecast average for the currency this year and the next.
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