peso down
The Philippine peso slid further on Thursday (February 24, 2022) against the US dollar following a spike in oil prices on supply disruption fears triggered by Russia’s invasion of Ukrainian cities. Image Credit: Gulf News

Manila: The Philippine peso could weaken in the short erm, further putting pressure on the country’s currency with demand for dollars up to cover higher import receipts as the economy continues to reopen, according to a US investment house.

The peso slid Friday (May 13, 2022) to 52.43 vs US$, after it weakened on Thursday to 52.39, according XE.com.

Officially rate was 52.38 on Friday, from 52.2670 on Thursday, based on Philippine central bank’s reference exchange rate bulletin.

New York-based GoldmanSachs has predicted that the US dollar will strengthen further over the next three months against the Philippine currency.

Overvalued dollar?

In general, however, Goldman Sachs sees the greenback as “highly overvalued” that it expects the US currency to weaken against Asian currencies for six months to a year.

Still, a further drop in the value of Philippine peso is expected.

“We are bearish on the PHP as re-opening of the economy should lead to a widening of the current account deficit,” Goldman Sachs said.

Last week, the Bangko Sentral ng Pilipinas (BSP) said its gross international reserves (GIR) decreased slightly to $106.8 billion as of the end of April from $107.3 billion a month earlier. However, the BSP said its reserve assets—comprising foreign investments, gold, foreign exchange, reserve position in the International Monetary Fund, and special drawing rights—continued to represent a more than adequate external liquidity buffer. The latest GIR level is equivalent to 9.4 months’ worth of imports of goods and payments of services and primary income. Such reserves are considered adequate if they can cover at least three-months’ worth. In the first quarter of 2022, the net outflow of short-term investments that are registered with the BSP narrowed significantly to $16 million from the $467 million net outflow recorded in the same period of 2021.