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Peso Touch Weaker, Diokno Reiterates PHP60 Is Line In Sand


The market is digesting comments from FinSec & ex-BSP Gov Diokno who speaks at a forum in Manila. The Philippine peso is slightly weaker against the greenback, as the ADXY has lost some altitude.

  • Diokno drew a line in the sand at PHP60, vowing aggressive action to defend that level via a combination of interest-rate hikes and interventions in the currency markets. The official, who sits on the central bank's Monetary Board, said he sees 100bp worth of further rate hikes this cycle, while noting that $10bn of reserves could be used to prop up the peso. The official stressed the importance of central bank independence, but strongly hinted what are his preferences on the FX/monetary policy front.
  • The impact on the PHP has been limited, with comments on the effective cap on peso weakness being mere reiteration of remarks from last Friday. The Bangko Sentral's next meeting is slated for November 17. Per BBG MIPR tool, the market sees the key policy rate reaching ~5.12% over the next three months.
  • Spot USD/PHP last +0.123 at PHP58.888. The all-time high at PHP59 provides the initial technical ceiling, with bears looking for losses past Oct 5 low of PHP58.395.
  • USD/PHP 1-month NDF last +0.240 at PHP59.010. Topside focus falls on Sep 28 record high of PHP59.460, while bears keep an eye on Oct 5 low of PHP58.520.

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