Indonesian & Philippine Central Banks Stand Pat But Deploy Different Rhetoric

Today's monetary policy decisions from two Asian central banks provoked little in the way of notable reaction in local currencies. Both Bangko Sentral ng Pilipinas and Bank Indonesia keeping interest rates unchanged but they differed in forward guidance, hinting at the prospect of divergent rate paths.

• Spot USD/PHP closed +0.03 at 56.85, with the initial layer of resistance defined at 57.00. The pair has been testing this level since mid-August, to no avail. 1-Month NDF trade +0.12 at 56.88, with bulls looking for a clearance of Sep 6 high of 57.14.
  • BSP Governor Remolona kept the door open to a November rate hike as risks to the inflation outlook are skewed to the upside. The magnitude of the potential move will depend on the data.
• Spot USD/IDR closed at 15,375, 9 figs below neutral levels. The rate operates near its best levels since March. 1-Month NDF last deal +6 figs at 15,377, with bulls targeting Mar 15 high of 15,542.
  • BI Governor Warjiyo suggested that "there is room to review BI's interest rate policy," with inflation expected to remain within the target range, albeit heightened uncertainty and a strong USD stand in the way of rate cuts for now.