Peso seen hitting 42:$1 (Commodity prices continues to swell and does not GO DOWN)
By Doris Dumlao
Last updated 11:11pm (Mla time) 09/24/2007
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Close this MANILA, Philippines - American Express bank sees the peso surging to as high as 42:$1 in the next three months on the country's improved macroeconomic fundamentals and reduced global investor aversion to emerging markets.
The peso on Monday closed stronger at 45.155 from Friday's 45.31 to the US dollar as last week's 50-percentage cut in the US Federal Reserve's benchmark rate made Asian currencies and equities more attractive to investors.
In its currency outlook for September-October, the London-based global economics unit of Amex said lower risk aversion would boost peso value.
The bank assigned a 15-percent risk of the peso depreciating by over 10 percent against the greenback in the next three months. Over a 12-month period, Amex sees the peso holding at about 44:$1.
"The improved fiscal performance should remain on track and economic growth will likely stay well-supported by household spending, business investment and government spending, despite the Philippines' high exposure to the prospect of weaker exports," Amex said.
For this year, even the Bangko Sentral ng Pilipinas (the Philippine central bank) has scaled down its export growth outlook to 8 percent from an earlier forecast of 11 percent.
"Worker remittance inflows are also well-diversified and will probably hold at a high level," Amex added