Philippine Inflation Accelerates As Expected, Upside Risks To Outlook Dominate

Spot USD/PHP trades +0.092 at PHP58.763, operating in the vicinity of record highs located near PHP59.000. Bears look for a pullback towards the 50-DMA at PHP56.698. 1-month NDF last +0.160 at PHP58.920, just below the all-time high of PHP59.460, with downside focus falling on the 50-DMA at PHP56.926.

• Tuesday saw a net $1.64mn outflow from the Philippine stock market, while the PSEi rallied on better risk appetite. The index re-opened higher today but has already erased those gains and last trades 0.5% lower.
• Headline inflation in the Philippines quickened to +6.9% Y/Y in September from +6.3%, in line with the median estimate in a Bloomberg survey, reaching the fastest pace since Oct 2018. Food and non-alcoholic drinks remained the main drivers of overall price growth, while National Statistician warned that the recent typhoon and public transport fare hikes this month may exacerbate price pressures going forward.
• The BSP said it "is prepared to take further policy actions" to bring inflation towards the +2.0%-4.0% Y/Y target range over the medium term. The central bank noted that upside risks dominate in near-term outlook and called for non-monetary government interventions to tackle inflation.
• Separately, Bangko Sentral said it is taking steps to "manage any disruption" in the financial market and asked "those who have the means not to take undue advantage of changing market conditions," while Gov Medalla alluded to the toolkit that can be used for managing currency moves.