Risk Aversion Puts Peso On Defensive With BSP Refusing To Prop It Up

Spot USD/PHP turned bid as onshore markets re-opened, playing catch-up with overnight risk-off impetus. The rate came close to testing its recent cyclical highs (PHP55.147). With the rate last dealing +0.295 at PHP55.045, such a move would fuel bullish bets, clearing the way to Oct 13, 2005 high of PHP55.903. Bears look for a retreat below consecutive round figures - PHP55.000 & PHP54.000.

• USD/PHP 1-month NDF last +0.230 at PHP55.110. Recent cycle high, located at PHP55.280, provides the initial bullish target. Bears would be pleased by a dip towards the PHP54.000 level.
• Selling pressure that saps strength from the peso is amplified by recent comments from the Philippines' top central bankers, who said that they are allowing the market to freely determine currency levels.
• Outgoing BSP Gov Diokno reiterated that the central bank is not intervening in support of the peso and only engages in FX transactions to smooth volatility. The official noted that Q2 growth will likely be faster than in Q1, adding that debt-to-GDP ratio is quite reasonable.
• Ferdinand Marcos is preparing to formally take power on Thursday after the Supreme Court has rejected petitions challenging his presidential candidacy.
• Metro Manila will remain under COVID Alert Level 1 for the next two weeks, officials said during the regular update.
• Philippine bank lending data may be published as soon as today, but there is no fixed time of release.