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PHP: Outperforms In SEA Past Week, BSP Comfortable With Peso Backdrop

PHP
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USD/PHP tracks near 56.30/35 in latest dealings, little changed for the session. We touched 56.40 earlier, which was fresh highs in the pair back to the first half of Sep. More broadly, we are wedged between the 20-day EMA (56.17) on the downside, while the 50-day sits further north (56.65). 

  • USD/PHP trends have followed USD BBDXY shifts in recent weeks. PHP has lost around 0.50% in the past week, outperforming most other parts of Asia FX, with MYR, IDR and THB all off more than 2% over this period. However, as we have noted in recent months, USD/PHP has lagged these currencies in terms of gains against the USD, so in turn is perhaps seeing less upside pressure.
  • Local equities hold close to recent highs (PCOMP above 7400). Offshore investors have been happy to keep allocations to local stocks this past week, with BSP's easing trajectory/local growth outlook, potential supports.
  • BSP Governor Remolona noted earlier the central bank is comfortably with the broader PHP rally in recent months and has not been active in FX markets.
  • Remolona also stated that the central bank favors 25bps shifts in terms of potential further easings, rather than 50bps moves (per BBG).
  • Today's inflation data, with Sep headline dipping sub 2.0%, which was well below expectations, reinforces a cut likelihood at the next BSP policy meeting (Oct 16). 
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USD/PHP tracks near 56.30/35 in latest dealings, little changed for the session. We touched 56.40 earlier, which was fresh highs in the pair back to the first half of Sep. More broadly, we are wedged between the 20-day EMA (56.17) on the downside, while the 50-day sits further north (56.65). 

  • USD/PHP trends have followed USD BBDXY shifts in recent weeks. PHP has lost around 0.50% in the past week, outperforming most other parts of Asia FX, with MYR, IDR and THB all off more than 2% over this period. However, as we have noted in recent months, USD/PHP has lagged these currencies in terms of gains against the USD, so in turn is perhaps seeing less upside pressure.
  • Local equities hold close to recent highs (PCOMP above 7400). Offshore investors have been happy to keep allocations to local stocks this past week, with BSP's easing trajectory/local growth outlook, potential supports.
  • BSP Governor Remolona noted earlier the central bank is comfortably with the broader PHP rally in recent months and has not been active in FX markets.
  • Remolona also stated that the central bank favors 25bps shifts in terms of potential further easings, rather than 50bps moves (per BBG).
  • Today's inflation data, with Sep headline dipping sub 2.0%, which was well below expectations, reinforces a cut likelihood at the next BSP policy meeting (Oct 16).