PHP: BoP Improved, But Risks Abound

We believe the Philippine peso could suffer in the short term as investors become wary about the sustainability of the economic upturn seen in many economies in Q209. As such the unit could slip towards support in the PHP48.45/US$ in particular if Q209 GDP data, to be released on August 27, were to disappoint. A break of that level could take the peso back to PHP49.00/US$. However, with remittances robust and exports bottoming out the trajectory for the peso over the medium-term should be upward. We thus expect the peso to eventually return to the strong side of PHP48.00/US$, testing

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