“The peso is likely to trade at an average of P53.90 against the US dollar for the rest of the year.”

The local currency the peso was seen pushing past the P54 per dollar barrier at some point ahead and likely complete the year sharply weaker on average to P53.90, versus P53.429 at present, according to the First Metro Investment Corp. (FMIC).

At its mid-year economic briefing yesterday, FMIC executives plotted a sharply weaker peso against the backdrop of an improving US economy and a surging dollar boosted by an interest rate adjustment by the US Fed.

The prospectively weaker peso could undercut the double-digit import growth helping feed the requirements of the massive Build, Build, Build initiative of the government and make for more expensive foreign loans, among other outcomes.

“The peso is likely to trade at an average of P53.90 against the US dollar for the rest of the year,” FMIC President Rabboni Francis B. Arjonillo said.

He argued the depreciating currency was not necessarily bad and that this even had a positive impact over the short- and medium horizon.

“A weak peso would discourage imports and produce more exports, thus reducing the trade deficit over the medium term. High peso-dollar exchange rate would benefit a vast majority of Filipino families as it would increase the peso income of the overseas Filipino worker (OFW) families, exporters and those that supply raw materials to exporters,” Arjonilla said.

The local unit has thus far averaged lower to only 53.429 per dollar at the moment compared to 53.048 per dollar average in June.

According to Jonas Ravelas, strategist at Banco de Oro, the peso’s value only highlights the persistence of the strong dollar momentum.

“Continue to expect the currency to range within the 53.35 to 53.65 levels in the near term. Immediate support and resistance is seen at 53.35 to 53.65 levels, respectively,” he said also yesterday.

At these levels, the country’s exports were projected to grow from a range as low as 6 percent to as high as 10 percent. Exports have thus far fallen by 3.8 percent in May from 4.9 percent in April.

Imports were also seen growing from 10 percent to as high as 14 percent this year.

FMIC executives and their analysts believe local output growth measured as the gross domestic product (GDP) will likely average 7 percent to as high as 7.5 percent this year, in part because the massive buildup of public infrastructures would require the disbursement of fund equal to 5.4 percent of GDP.

The buildup would complement the rise in consumption activities linked to the remittances of some 10 million OFW averaging 2 to 4 percent this year. This, the executives said, no matter the uptrend in inflation, which corrodes the spending power of the typical consumer, raning from 4.2 percent up to 4.5 percent.

But even as these events unfold, the government under President Duterte should not incur liabilities exceeding ther 43 percent ceiling on public debt as a fraction of GDP.

National government debt as percent of GDP has steadily fallen from a high of 54.8 percent of GDP in 2009 down to only 52.4 percent the following year, then 51 percent in 2011, 51.5 percent in 2012, 49.2 percent in 2013, 45.5 percent in 2014 and fractionally lower to 45.05 percent in 2015 and baredly changed at 42.1 percent the past two years.

The government capacity to pay down its obligations has been made possible by fiscal and monetary reform measures that allow government to generate additional revenues and, by extension, its capacity to underwrite the projects and programs that redound to the benefit of Filipinos wherever they are.