Peso Extends Gains After BSP Rate Decision

USD/PHP 1-month NDF extended losses to an intraday low of PHP54.23 but then ticked away from worst levels as Bangko Sentral ng Pilipinas raised interest rates by 25bp, in line with consensus forecast, and slightly lowered the expected inflation path citing the delayed impact of past rate hikes.

• When this is being typed, USD/PHP 1-month NDF trade -0.11 at PHP54.28. On the downside, losses past Mar 21 low of PHP54.17 would bring Feb 3 low of PHP53.58 into view. Bulls need a rally above Mar 8/Feb 27 highs of PHP55.57/55.68 to regain poise.
• Spot USD/PHP closed -0.22 at PHP54.31, coming under light pressure after the BSP rate decision. Bears keep an eye on Feb 3 low of PHP53.61, while bulls look for a rebound towards Feb 27 high of PHP55.62.
• BSP Gov Medalla stressed that the risks to the inflation outlook are tilted to the upside, noting that domestic food supply shortages remain a concern, while utility and wage costs point to a broader CPI pressure. The official noted that anchoring inflation is the BSP's top priority, adding that a reversal of tightening will come once CPI inflation returns to the +2.0%-4.0% Y/Y target range.