Peso Loses Ground With BSP Assessing When To Unwind Stimulus, Diokno's Speech Eyed

The Philippine peso has been the worst performer in Asia this month, after USD/PHP took flight in the wake of the most recent BSP MonPol decision & a break for Lunar New Year holidays. The rate has extended its rally to a fresh four-month high today and last sits at PHP48.600.

• Implied USD/PHP volatility continues to soar, with 1-month tenor last at 4.2875, which is its best level since Jan 6.
• BSP Gov Diokno's comments delivered at last Friday's annual event for bankers continue to grab attention, after the official noted that the central bank is "carefully assessing" the best time for unwinding its stimulatory measures. Diokno observed that BSP provided over PHP2tn in liquidity in response to the Covid-19 crisis via rate cuts as well as looser lending rules and reserve requirements.
• Worth flagging in advance that Pres Duterte will speak this evening and may make an announcement re: easing lockdown restrictions in Manila.
• Duterte's announcement comes on the heels of a unanimous recommendation from the Metro Manila Council and the government's Inter-Agency Task Force managing the country's Covid-19 response to ease restrictions in the capital to modified general community quarantine (MGCQ), the lowest possible level.
• Philippine authorities had to evacuate more than 50,000 people in the southern part of the country as a tropical storm approaches.
• S&P noted that they see non-performing loans at Philippine banks jump in Q1 amid the phasing out of loan moratoriums and fiscal support and expect them to top out by H2.
• Bulls look to retain the current momentum and force a break above Oct 16 high of PHP48.708, which would open up the descending 200-DMA at PHP48.900. Bears keep an eye on Feb 17 low of PHP48.281, followed by the round figure of PHP48.000.
• Coming up in the Philippines this week, we have budget balance, due Friday, and overall BoP, with no fixed time attached.