Peso Tad Firmer In The Wake Of Hawkish Official Commentary

Spot USD/PHP trades -0.065 at PHP58.805, ticking away from the PH59 level which has provided firm resistance recently (the gov't drew a line in the sand at PHP60). Bears look for a slide through Oct 5 low of PHP58.395.

• USD/PHP 1-month NDF last -0.060 at PHP58.910. Bears set their sights on Oct 5 low of PHP58.520, while bulls look to a move through the all-time high of PHP58.460.
• Bangko Sentral ng Pilipinas flexed its rate-hike muscles as Gov Medalla suggested that more aggressive tightening may be on the table. The Governor said that "there's a threshold where [peso depreciation] becomes very political so it's good to act before it becomes too political," with 100bp worth of rate hikes possible through the year-end. The BSP may also need to match the Fed's move if it's another 75bp hike, with narrowing U.S./Philippines yield differential accentuating gains in USD/PHP.
• Speaking at the same event Monday, FinSec Diokno flagged hawkish inclinations and said the gov't wouldn't like to see USD/PHP crossing the PHP60 threshold.
• Offshore investors sold a net $3.76mn in Philippine stocks Monday, while the PSEi edged higher, extending gains this morning, albeit at a slow clip.
• The Philippines will report September budget balance tomorrow.