EUR/PHP Outlook:
The EUR/PHP exchange rate is likely to decrease as it is currently trading below its recent average and near recent lows, influenced by a significant driver in the Philippine economy.
Key drivers:
• Rate gap: The European Central Bank has kept interest rates stable amid economic uncertainties, while the Bangko Sentral ng Pilipinas is easing rates to stimulate growth, putting downward pressure on the peso.
• Risk/commodities: Recent oil prices are significantly above their average, which could lead to inflation risks that may affect the euro negatively as energy costs rise in the Eurozone.
• Political and fiscal risks: Ongoing corruption scandals in the Philippines are raising concerns about political stability, which could affect investor confidence in the peso.
Range:
The EUR/PHP is likely to drift within its recent range, reflecting the downward pressure but also limited volatility.
What could change it:
• Upside risk: An unexpected improvement in Eurozone economic indicators could strengthen the euro.
• Downside risk: Further political instability or economic mismanagement in the Philippines could exacerbate peso weakness.
