USD/PHP to edge higher on difference in monetary policy – Mizuho
In November, the Philippine peso appreciated against the US dollar and the USD/PHP fell below the 50.00 mark for the first time in approximately two months. Economists at Mizuho Bank believe that market participants are likely to be encouraged to buy the US dollar and sell the Philippine peso based on the difference in respective monetary policy.
The US is normalizing its monetary policy while the Philippines maintains measures of monetary easing
“It is also possible for risk assets to depreciate as a result of expectations for early interest rate hikes based on strong economic indices in the US, and this should be kept in mind as a potential factor that could lead the PHP to depreciate sharply in the times ahead.”
“There have been concerns over the global spread of the new COVID-19 variant detected in South Africa, which is another potential factor to lead the Philippine peso to depreciate in the coming month.”
“The central bank of the Philippines will maintain measures of monetary easing in order to prioritize stable economic recovery. The PHP is thus forecast to weaken in the times ahead.”
“The US dollar is forecast to appreciate against the Philippine peso only slowly, as the Philippine peso is supported by the recovery of economic activities based on the relaxation of restrictions on public movement as well as based on OFW remittances.”
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FXStreet Insights Team
FXStreet
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