1 CAD is trading against the Philippine Peso at 36.83 this week and the rate is forecasted to decrease slightly going into next.
The exchange rate is expected to drop from 36.83 to 34.98 with a YTD return of -5.12% despite the fact that PHP has been stagnating over the last year.
According to Credit Agricole SA and Nomura Holdings, the Philippine peso is moving towards its “biggest quarterly gain in a decade and still has scope to appreciate due to positive fund flows.”
This year PHP has strengthened 4.6%, surpassing its neighboring countries, according to Bloomberg “the rally has been driven by an expanding balance-of-payment surplus, increasing foreign reserves, and an unexpected rebound in remittances.”
“Overseas cash remittances via banks climbed 7.8% in July from a year earlier to $2.78 billion. These were expected to fall 5.4%” according to Bloomberg .
The Philippine peso has been looking hopeful as the year ends, Eddie Cheung, an emerging-markets strategist at Credit Agricole in Hong Kong explains that “the trade deficit has narrowed, significantly boosting the current account. Combined with the resilience of remittances, these are factors leading us to think the peso has room to advance.”
Not everyone is hopeful as the Philippine peso is moved closer towards a central-bank intervention to prevent over-inflation. Based on the current trajectory strategists fear that the current surplus may lead to an out-performance that the currency will not be able to keep up within 2021.
The median forecast in a Bloomberg survey states that PHP is expected to have a minimal change by the end of the year at 48.6 and then weakened to 49.1 by the middle of 2021.
By Surina Nath