The Peso-Dollar exchange rate Could violate the assumptions of this year until 2026, in the midst of expectations of slower cuts by the American Federal Reserve, said the Bangko Sentral NG Pilipinas (BSP).
“The exchange rate can settle slightly above the assumptions of the Development Budget Coordination Committee (DBCC) before 2025 and 2026,” said it in its last monetary policy report.
The DBCC expects that the PESO will trade around P56-P58 per dollar this year and P55-P58 in 2026.
“This projection is due to the slower pace of increasing monetary policy by the United States Federal Reserve (US FED) and recent movements in the PESO in the short term,” the Central Bank said.
The US central bank held the interest rates stable on Wednesday and chairman of the Federal Reserve Jerome H. Powell said that there would be no hurry to cut them again until the inflation and baneng data made it appropriate, Reuters reported.
After the Fed had reduced the rates three times in the last part of last year, inflation has largely been moved aside in recent months, but “remains increased,” said the policy institution of the Central Bank Federal Open Markt Committee in a statement after a unanimous decision The benchmark keeps interest in the current reach of 4.25% -4.5% at night at night.
Mr Powell said from their first policy meeting during the second term of President Donald J. Trump in the White HouseFIcials wait “to see which policy is being determined.”
As a result, Fed Fund Futures still imply around 48 basic points (BPS) to relax this year compared to 49 BPs earlier in the week. The next step is only expected in June, When the chance of a cut is placed at 73%.
The BSP expects the FED to deliver to 75 BPS cuts this year and 25 BPS for 2026.
The central bank said that the PESO was abolished in October and November “because of the broad strengthening of the US dollar after the US Fed has indicated that there was no urgency to further illuminate policy rates.”
In 2024, the PESO closed on its record Layer of P59 three times (on November 21 and November 26 and December 19) It is not yet violated these of all time, which was first completed in October 2022.
“Concern about the inflationary impact of the economic policy of Donald J. Trump (US President) Donald J. Trump Also weighed on the peso, “the BSP added.
Mr. Trump has proposed various policy measures that inflation could burn, such as stricter import rates and stricter immigration measures.
He has promised rates up to 60% on China, 25% on Mexico and Canada and a universal rate of up to 10%.
The BSP said that the recent weakness of the currency was also influenced by a slower growth of the gross domestic product (GDP) in the third quarter, a higher outstanding debts, a broader trade and shortage in the current account, as well as political uncertainty.
“Nevertheless, the depreciation of the PESO was partially tempered by persistent structural FX entry from direct foreign investments and foreign portfolio investments, and higher overseas Filipin’s convergations,” it added. – Luisa Maria Jacinta C. Jocson