Free Trial

PHP50 Gives Way As Diokno Suggests BSP Won't Step In To Curb Peso Weakness


The peso is on track to be the worst G10 performer for the second week in a row, and may register its largest weekly loss in years. USD/PHP has extended gains past the PHP50.000 mark to a new one-year high of PHP50.156, after the Philippines reported a wider than expected trade deficit for the month of May, with exports growth missing median estimate. Yesterday's risk aversion and comments from BSP Gov Diokno may have added some pressure to the peso, with the off'l suggesting that the central bank won't intervene in FX markets.

  • The Philippines' trade deficit shrank to $2.755bn in May from $3.085bn prior, vs. exp. of a $2.621bn shortfall. Exports grew 29.8% Y/Y, missing forecast of a 33.6% Y/Y increase. Imports rose 47.7% Y/Y, while analysts expected a growth rate of 49.0%.
  • BSP Gov Diokno said Thursday that the peso's depreciation is driven by supply and demand, adding that the central bank will only participate in the market "to minimise fluctuations."
  • Philippine Jun overall BoP and May overseas remittances are expected to hit the wires next week, but there is no fixed time of either release.
  • USD/PHP last changes hands +0.195 at PHP50.075, with topside focus falling on Jun 23, 2020 high of PHP50.245. A break here would clear the way to Jun 15, 2020 high of PHP50.380. On the downside, a pullback under Jul 2 low of PHP49.085 would bring bears some reprieve.
  • USD/PHP 1-month NDF sits +0.030 at PHP50.390. A break above yesterday's high of PHP50.510 would bring May 22, 2020 high of PHP50.990 into view. Bears keep an eye on Jul 2 low of PHP49.250.

Fig. 1: Philippine Import and Export Statistics May 2020 and 2021

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.