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July 31, 2012
What would the Peso-Dollar exchange rate be by the end of the year?
If we only knew the answer, no doubt that we would be very, very rich. Imagine being able to accurately hedge currencies. Or to know the correct timing to convert US Dollars to Philippine Peso. Or to be able to invest all your money in the currency that would rise in value. Whew, if we only knew.
We looked at some exchange rate predictions issued by top investment analysts in the country that we can use as guide.
Last week, the Peso closed at P41.93 versus the US Dollar. That’s a 4.5% appreciation from the start of the year, still making the Peso one of the best performing currencies in Asia in terms of appreciation compared to the Dollar.
What about the exchange rate forecasts by the end of the year?
We checked Bloomberg and the analysts’ consensus as of July 2012 is that the Peso will slightly depreciate to P42.20 by the end of the year.
Of course, there are extremes in the forecasts compiled by Bloomberg. One analyst, BNP Paribas, predicts the Peso to further strengthen to P40.00. In contrast, Lloyds Banking Group expects the Peso to weaken to P45.50 versus the greenback by year-end.
Other analysts’ forecasts from Bloomberg are summarized below.
| Analyst/Broker | 2012 Q4 Forecast | 2013 Forecast | Issued on |
|---|---|---|---|
| Bank of America | P42.00 | P42.00 | July 9, 2012 |
| Barclays | P42.00 | -- | July 23, 2012 |
| BNP Paribas | P40.00 | P38.00 | July 3, 2012 |
| Citigroup | P42.60 | P42.00 | July 20, 2012 |
| Credit Suisse | P43.40 | -- | June 29, 2012 |
| HSBC Holdings | P42.40 | P41.40 | July 24, 2012 |
| JP Morgan Chase | P42.50 | -- | July 20, 2012 |
| Lloyds Banking Group | P45.50 | P43.00 | July 11, 2012 |
| Royal Bank of Scotland | P41.00 | P40.00 | July 10, 2012 |
| Standard Chartered | P40.50 | P41.00 | July 12, 2012 |
| UBS | P42.00 | P40.00 | July 3, 2012 |
| Wells Fargo | P41.50 | P40.50 | July 10, 2012 |
| AVERAGE | P42.20 | P40.80 | |
| HIGH | P45.50 | P43.00 | |
| LOW | P40.00 | P38.00 |
Who do we trust? That’s your judgment call.
FYI, last year we made this same post about the analysts’ forecast of the exchange rate by the end of 2011. It appeared most of the predictions in July 2011 were off, with almost all brokers expecting the Peso to strengthen to the P41.00-P42.00 range. Actually in December 2011, the peso-dollar exchange rate averaged P43.64.
Well, a forecast is really just an “informed opinion.” And sometimes opinions may be right or wrong. So our warning: take the’ forecasts above with a grain of salt.
Better yet, give us your own forecast on the Peso-Dollar exchange rate by December 2012. Do you think the peso will appreciate or depreciate versus the dollar? Post your exchange rate forecasts below.
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