Diokno Admits BSP Intervenes In FX Markets To Curb Volatility, Rate Hikes Unlikely In 1H21

Spot USD/PHP has wavered since onshore Philippine markets re-opened, but has generally stayed in negative territory. The rate last sits -0.035 at PHP51.120, with bears looking for a clean break under Jan 5 low of PHP50.900, which would open up Dec 29 low of PHP50.535. Bulls keep an eye on PHP51.440, which capped gains on Jan 10.

• USD/PHP 1-month NDF last seen +0.040 at PHP51.290. Bulls look for a rally above Jan 10 high of PHP52.050 towards Jan 4 high of PHP52.140. Conversely, a fall through the 50-DMA/100-DMA at PHP50.592/50.574 would please bears.
• BSP Gov Diokno admitted Tuesday that the central bank is participating in the market as USD/PHP has crossed above PHP51.000. The official stressed that "that's only because we just want to temper excess volatility" and officials are willing to "let the market determine the exchange."
• On interest rates, the Governor said that any hikes in the first half of this year are unlikely. Policymakers want to see the economic recovery pick up momentum, which would be evidenced by four-six quarters of GDP growth and unemployment around 5%, before they make adjustments to monetary policy settings.
• Elsewhere, the Presidential Palace said they are prepared for a scenario in which Metro Manila reverts to the second-highest Alert Level 4, as OCTA Research warned that the capital region is experiencing a "severe outbreak."
• Bangko Sentral ng Pilipinas are expected to release the latest update on overseas cash remittances this coming Monday.