Diokno Points To Room For Manoeuvre On Interest Rates

Spot USD/PHP holds above neutral levels, last +0.028 at PHP51.385. Topside focus remains on PHP51.500, a key near-term resistance level. Bears keep an eye on Feb 10 low of PHP51.210, followed by Feb 3/Jan 5 lows of PHP50.920/50.900.

• USD/PHP 1-month NDF last -0.020 at PHP51.540. Bears see Feb 16 low of PHP51.210 as their initial target, while bulls look to a move through Feb 8 high of PHP51.780.
• BSP Gov Diokno stepped in to pour cold water on hawkish sentiments, which may have been stoked by the Monetary Board's comment in last week's statement that preparations for eventual policy normalisation were ongoing. In response to a question on the impact of the looming Fed tightening, Diokno said that Bangko Sentral still has room to manoeuvre on rates given the Philippines' good inflation outlook. He added that the central bank is comfortable with current USD/PHP levels and the peso's slight depreciation.
• Worth adding that late doors on Friday, January data showed that the Philippines' BoP flipped into a deficit of $102mn from a $991mn surplus.