Rallies Past 55.00 On Trade Figures, But Strong Domestic Demand Should Boost Imports In 2023

The PHP is leading gains among Asia FX so far today. USD/PHP was last at 54.85, -0.52% for the session and fresh lows back to late June 2022. 54.50 and beyond that, 54.00, seem reasonable downside targets if the weaker USD trend continues. On the topside, the simple 200-day MA is at 55.32.

• Better than expected trade figures has aided peso sentiment, exports rising 13.2% Y/Y for Nov (11.5% forecast), while imports slipped to -1.9% Y/Y (+3.0% forecast). This pushed the trade deficit to -$3.68bn, slightly wider than last month, but below the -$4.13bn forecast.
• It remains to be seen how much longer export growth can hold up given softer signs elsewhere, while BSP Governor Medalla stated pent up demand remains strong, which, all else equal, should aid import growth.
• The Governor also stated interest rates at 5.5% is not high if inflation is 8%, while stating inflation should be closer to 2% later this year/early 2024.
• GDP growth of more than 6% is expected this year (note the consensus sits at 5.5%).