Line In Sand Holds After BSP Flags Readiness To Use "Other Tools" For Smoothing Volatility

Spot USD/PHP last seen +0.021 at PHP58.991, just shy of the PHP59 record high. One-month NDF trade +0.020 at PHP59.230, near all-time high at PHP59.460. Familiar technical contours are in play, as participants assess the latest round of BSP rhetoric.

• Offshore investors sold a net $2.03mn in Philippine stocks Wednesday, while the PSEi extended its winning streak to three consecutive days. The index resumes gains this morning, last operating 0.5% above neutral levels.
• Bangko Sentral ng Pilipinas vowed to "utilise other tools to respond to fluctuations in exchange rate," such as liquidity management measures, as it intervened in FX markets less than its peers. Assistant Gov Sicat said the central bank was trying to "smooth out excess daily volatility rather than defend any specific level or trend," even as PHP59 has provided a line in the sand for USD/PHP over the past three weeks.
• The Philippine peso has been among the biggest losers in emerging Asia, with only the KRW and TWD faring worse this year. The Philippines' twin deficit has undermined the PHP, despite sharp interest-rate increases delivered by the BSP.
• The Dept of Finance said in a statement that "sustained inflation increase in 2022 and 2023 will cause economic growth to slow down, which translates to a lower GDP level by 0.6% in 2023." Officials are preparing a six-year economic plan, set to be completed by the year-end.