The Philippine Peso is expected to end this year as the Green Guard remains under pressure due to continued attacks on the U.S. Federal Reserve by U.S. President Donald J. Trump.
MUFG Global Market Research says with global investors Stay bearish on the dollar.
“We have adjusted the PHP forecasts slightly stronger and have seen USD/PHP move towards the p56 level (previously p56.50 level). The main reason for the forecast changes is mainly global, not local, and our G10 team is now seeing an increasing focus on President Trump’s FED Independent,” it said in its September Forex Forex Report, which is an increasing focus on President Trump. ”
On Tuesday, the peso fell 35 Centavos from Monday’s P57.16 finish for the US dollar at P57.51. It’s its worst performance in nearly a month, or it ends with P57.63 since its match against Green’s Greenback on August 5.
Local units have increased by 33.5 Centavos so far, up from its end-2024 deadline of p57.845, or 0.58%.
According to its latest forecast, the research firm expects the peso to be P57 to USD for the quarter and further strengthen the P56.50 at the end of 2025. It sees local units rise to P56 in the first half of 2026 against Green Guard.
MUFG Global Market Research says concerns about the Federal Reserve will continue to be the focus of investors.
“Governor Lisa Cook, who President Trump decided to open fire on August 25, has escalated significantly, with the risks associated with threats to develop independence… Regardless of the outcome, Mr. Trump is willing to act proactively, and for us, we need investors to define this risk as a risk to U.S. assets, which is the financial market so far.fIce…so we lowered the dollar forecast to reflect These risks increase. ” it said.
According to Reuters, Trump has been relentlessly pressured the Fed to lower interest rates and has publicly discussed firing Fed Chairman Jerome H. Powell (Jerome H.
Trump proposed the fight last month, trying to fire Ms. Cook, a key legal test of the Fed’s ability to operate without political intervention, a cornerstone of modern central banks.
Mr. Trump has demanded lower interest rates to increase investment and to reduce some of the highest interest rates for mortgage lenders to developed countries.
But the reduction in political motivation will show that the Fed is willing to tolerate higher inflation, eroding the trust of investors who hold trillions of dollars in U.S. assets and rely on the Fed’s policy certainty.
This loss of confidence can increase long-term borrowing costs, which is more important than short-term central bank interest rates for mortgages and commercial loans Reduce the financing burden.
John Paolo RR Rivera, a senior fellow at the Philippine Development Institute, said that while Mr. Trump continues to work to undermine the Fed may weigh the dollar and benefit the peso and other emerging market currencies, it may not feel this unless the market sees “a shift in policy for the concrete Fed or a decrease in political pressure reduction.”
“Currently, the peso remains fixed near the P57 due to cautious investor sentiment, ongoing trade and fiscal pressures.A mess of flow,” Mr. Rivera said.
Domestic support
MUFG Global Market Research also says that the peso will be supported by a wide and positive economic environment.
“From a domestic perspective, many of the positives we mentioned have not changed, so we think PHP believes it is a moderate violation of the dollar,” it said.
It said inflation is expected to remain well in the “low-speed risk” of moderate rice prices and transportation and electricity costs.
“The recent temporary ban on rice imports is a key risk, but since domestic rice stocks are still high, the impact should be controllable.”
The Philippines’ headline inflation averaged 1.7% in the first seven months, well below the annual target of Sentral Ng Pilipinas (BSP) in Bangkok and is in line with its forecast for this year.
Inflation in rice has been slowing down among government measures to curb rising staple food prices, including measures to reduce tariffs.
The 60-day suspension imported from rice begins on September 1 and will end on October 30. It covers imports of conventional milled and burnt rice, but does not include varieties that are usually produced locally.
It added that it raised the BSP lowering benchmark interest rate by another 25 basis points (BP) in the fourth quarter to raise the final interest rate to 4.75%.
BSP lowered its target reverse buyback rate by 25 basis points last week, down to 5% for the third consecutive meeting. Since August 2024, it has cut borrowing costs by 150 basis points.
BSP Governor Eli M. Remolona, Jr. Says the latest move puts policy interest rates in the “best position” Both inflation and output indicate that central banks are approaching the end of their rate cycle.
Still, he provided an open attitude to the economy when needed, in the last reduction this year.
“Secondly, we expect actual FDI improvements, reflecting a surge in FDI approvals, especially in the renewable energy sector,” MUFG Global Markets Research said. “Third, the pipeline for public and private infrastructure projects remains strong.”
It added that the 19% “reciprocal” tariff rate would have minimal effect on Philippines exports to the United States, as the taxation was primarily comparable to those who slapped their competitors and the economy was domestically oriented.
“While the country focuses on lower value-added testing and assembly activities, the upcoming semiconductor sector tariffs are crucial to Philippine exports.”
Mr. Trump threatened to impose 100% tariffs on semiconductors.
In June, the United States was the highest destination for manufacturing goods in the Philippines, with a total of $1.22 billion, 35.2% higher than the same period last year. About 53% of the Philippines’ total exports to the United States are semiconductors and electronics. – BVR and Reuters And from KK Chan
