The peso is expected to depreciate further against the US dollar in the coming days, after hitting a 12-year low this week, Dutch financial giant ING Bank said in a report Tuesday.
ING Bank Manila senior economist Joey Cuyegkeng said the strong remittances from Filipinos working overseas were not enough to cover the shortfall in trade deficit this year.
The Bangko Sentral ng Pilipinas reported on Monday that money sent home by Filipinos working overseas rose 6.9 percent in May and 4.2 percent in the first five months.
“Despite the upside surprise in April and May, the monthly remittances remain inadequate to finance the monthly trade deficit. The shortfall of remittances to finance the May trade deficit amounted to $1.2 billion,” Cuyegkeng said.
“The shortfall for the five months is $3.9 billion, a turnaround from the excess of $1.2 billion in the first five months of 2017. This shortfall would likely continue and would keep the Philippine peso on the defensive,” Cuyegkeng said.
The peso hit a 12-year low of 53.53 against the US dollar on Monday, before recovering slightly to close at 53.39 against the greenback Tuesday.
Latest data from the Philippine Statistics Authority showed that the country’s trade-in-goods deficit widened by 48 percent in May to $3.7 billion. This brought the trade deficit in the first five months to $15.76 billion, up 55 percent from the $10.164-billion deficit a year ago.
Remittances in May 2018 expanded 6.9 percent to $2.469 billion from $2.310 billion a year earlier. This brought cash remittances in the first five months to $11.822 billion, up 4.2 percent from $11.336 billion in the same period last year.
Personal remittances, which include non-cash items, grew 6.1 percent in May to $2.746 billion from $2.588 billion in the same month last year. Personal remittances in the first five months hit $13.172 billion, up 4.4 percent from $12.613 billion a year ago. Julito G. Rada
British banking and financial giant Hongkong and Shanghai Banking Corp. said money sent home from overseas Filipinos would likely continue to recover in the months ahead after the government lifted the deployment ban to some countries in the Middle East.
Private economists projected the peso to average 53.03 a dollar in August. Economists at First Metro Investment Corp. and University of Asia & the Pacific said the solid upswing in the US economy provided further strength to the US dollar, while the widening Philippine trade deficit added pressure to the peso.
“The peso will continue to feel the heat as the US economy [and dollar] roars ahead and as long as the domestic economy manages to whittle down significantly its trade deficit, while inflation concerns should ease…,” they said.
