JPMorgan gives Philippine peso 'underweight' tag

Posted at 01/17/14 2:33 PM

MANILA, Philippines - JP Morgan keeps its "underweight" rating on the Philippine peso and warns the peso, togeter with other Asian currencies, is poised to weaken further.

In its latest research note, JP Morgan says Philippine rates are too low, which should discourage foreign fund inflows that used to lift the peso.

These foreign funds for most of last year went to emerging markets, like the Philippines, because of record low interest rates in the US, as the Federal Reserve injected more money into the system through its monthly billion dollar bond purchases.

The Philippines alone saw hot money inflows rise to 8% last year to an unprecedented level of $4.2 billion.

But now that the Fed is slowly cutting its stimulus, US interest rates are creeping up and foreign funds are returning there.

The peso touched a three-year low on Wednesday, and now stays within the 45-to-the-dollar territory. - ANC