Fitch Revises Philippines' Credit Rating Outlook To Negative

Spot USD/PHP has extended gains in early trade, after Fitch downgraded the Philippines' credit rating outlook, providing a fresh headwind for the struggling peso. The rate last sits +0.115 at PHP50.242, after topping out at PHP50.263.

• Fitch affirmed Philippines at BBB (second-lowest investment grade score), but revised its outlook to negative from stable, citing "increasing risks to the credit profile from the impact of the pandemic and its aftermath on policy-making as well as on economic and fiscal out-turns."
• Philippine FinSec Dominguez and BSP Gov Diokno released a joint statement in reaction to the update on the Philippines' credit rating. Dominguez argued that the impact of the pandemic will be temporary, while the economy seems to have registered a double-digit growth in Q2. Diokno signalled awareness of "the negative consequences of premature disengagement of our response measures."
• From a technical perspective, further gains past Jun 15, 2020 high of PHP50.380 would please bulls, shifting focus to May 28/22, 2020 highs of PHP50.770/50.795. On the flip side, a dip through the PHP50.000 mark would open up Jul 2 low of PHP49.085.
• USD/PHP 1-month NDF last seen unch. at PHP50.590. Topside focus falls on Jul 12 high of PHP50.740, followed by May 18, 2020 high of PHP51.100. Conversely, bears eye yesterday's low of PHP50.170 for initial support.