PHP/USD Outlook: Slightly weaker, but likely to move sideways, as the rate is near its three-month average and lacks a clear driving force.
Key drivers:
- Rate gap: The Bangko Sentral ng Pilipinas (BSP) signals potential interest rate cuts, which may weaken the peso against the US dollar.
- Geopolitical tensions are negatively impacting the USD, with ongoing uncertainties contributing to its decline and volatility.
- The Federal Reserve's forecasted rate cuts are expected to further diminish the value of the USD, aligning with a broader trend of reduced investor confidence.
Range: The PHP/USD exchange rate is likely to drift within the recent range, as neither currency shows strong momentum at this time.
What could change it:
- Upside risk: A sudden escalation in geopolitical tensions could lead to increased demand for the USD, driving it higher.
- Downside risk: Confirmation of significant rate cuts by the BSP could further weaken the peso, pushing the exchange rate down.