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New All-Time Lows For Peso As We Await BSP Monetary Policy Review


Spot USD/PHP trades +0.390 at PHP58.385, near all-time highs printed this morning at PHP58.425, in the interim between the Fed's monetary policy review and BSP rate decision. 1-Month NDF last +0.430 at PHP58.580 after topping out at a historic high of PHP58.700.

  • BSP Gov Medalla told reporters that the main reason for the peso's depreciation is the magnitude of the Fed's rate move, adding that it is "hard to say of the fact that Japan is not raising its rates has additional effect on our FX rates." He refused to comment on any specific FX levels that would be outside of the BSP's comfort zone.
  • In a separate pre-recorded speech, Medalla said the central bank "will do what's necessary to achieve a target-consistent inflation path," which is "of great importance." The Governor added that the policy rate is still "accommodative," despite monetary tightening delivered to date. The BSP's Monetary Board meets today and we expect it to raise the policy rate by a further 50bp, taking it above pre-pandemic levels (see our preview here).
  • Offshore investors sold $7.3mn in Philippine stocks Wednesday, while the PSEi fell to its worst levels since early Aug, refreshing multi-week lows this morning (last -1.7%).

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