MANILA, Philippines - The peso is expected to climb back to the P41-territory and end the year between P41 and P42 against the dollar, First Metro Investment Corp. and University of Asia and the Pacific said on Wednesday.
In its latest issue of The Market Call, FMIC and UA&P said this is seen to be the case as the Bangko Sentral ng Pilipinas seem against allowing the currency to strengthen any further.
"The BSP may not want the peso to appreciate further and we may see 2013 end up within P41-P42," FMIC and UA&P said.
The local unit closed at P41.05:$1 in 2012, stronger than its P43.84:$1 finish in 2011.
The peso has averaged P41.20 to a dollar in the fourth quarter last year from P41.90:$1 in the third quarter.
FMIC and UA&P blamed the appreciation of the peso was blamed to the spreading Greek and Spain debt crises, along with the slower-than-expected US recovery during the period.
Moreover, the institutions said "the renewed investors risk aversion toward the greenback arising from the US fiscal cliff could be seen as the culprit of continued inflow of portfolio investments into the Philippines despite external global problems."
Continued inflows to the country contribute to the appreciation of the peso.
FMIC and UA&P noted the central bank has been very cautious of the speculative flows and has even put in place measures to curb and prohibit these from going into the Philippines, although these moves did not put a stop to the peso's appreciation.
A strengthening peso diminishes OFW-dependent families' spending power and also makes the exports industry's goods less competitive in the international market. Moreover, the appreciation bias of the peso is seen to curb gains of the BPO industry, one of the country's main growth drivers.
The peso continued to strengthen in January, as the currency closed P40.57:$1 on Jan. 15 and finished P40.575:$1 on Jan. 18.
FMIC and UA&P expect the peso to average P40.60:$1 in January before weakening to P41.40:$1 in February and to P41.70:$1 in March.