Peso Catches Bid As Diokno Deems RRR Cut Now Untimely, Unjustified

The Philippine peso got a fillip from the latest round of BSP Gov Diokno's comments, as the central bank chief pushed back against recent speculation and ruled out cutting the RRR at the upcoming monetary policy meeting. Diokno told ANC that taking this step now would be untimely and unjustified, therefore it is not on Bangko Sentral's agenda for the policy meeting slated for Thursday.

• Diokno also said that he expects strong economic recovery in Q2 and sees 2021 GDP growth at around +6% Y/Y.
• BSP said over the weekend that it will not issue a moratorium or grace period for loans during the Aug 6 - 20 lockdown in the capital region, but clients may still seek financial relief from their banks.
• Meanwhile, the Philippine Star cited Econ Planning Sec Chua as noting that the weekly cost of a strict lockdown imposed in the NCR could reach PHP150bn, almost twice as much as projected before.
• On a different front, data released this morning showed that the Philippine agriculture output shrank 1.5% Y/Y in Q2, albeit rough rice production rose 1.2% Y/Y.
• Spot USD/PHP last sits -0.035 at PHP50.370, with bears looking for a continued sell-off past Aug 4 low of PHP49.605. On the flip side, a jump above Jul 28/19 highs of PHP50.490/50.496 would bring May 28/22 highs of PHP50.770/50.795 into view.
• USD/PHP 1-month NDF last -0.160 at PHP50.630 and a fall through Aug 3 low of PHP49.680 would open up the 50-DMA at PHP49.400. Bulls set their sights on PHP51.390, which capped gains on Jul 19.