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Underperforms In The Past Week, BSP States Policy Has Been Tighter Than Necessary

PHP
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USD/PHP is back close to 57.70, around 0.40% weaker in PHP terms for the session so far. This is in line with other SEA FX, with THB off around 0.40% and IDR down 0.35%.

  • The pair remains sub recent highs of 57.89 from earlier in the week. Focus is likely to remain on whether we can test 58.00 on the upside. Note the 20-day EMA sits back near 57.42, while the 50-day is around 56.96.
  • PHP weakness today is in line with regional trends, but it has underperformed over the past week, off nearly 0.50%, despite a softer USD backdrop elsewhere.
  • Earlier comments from BSP Governor Remolona are likely to reinforce risks around easier policy setting as we move into H2 of this year. The governor stating he is confident they can start the easing cycle in this period and that policy has been tighter than necessary.
  • He added they still have a hawkish bias but less so than before. Remolona sounded relaxed in terms of the FX backdrop, stating they have intervened only modestly recently, while FX reserve levels are comfortable.
  • Some sell-side analysts still see BSP easing as dependent on when the Fed starts cutting rates though. More dovish BSP rhetoric coupled with recent Fed push back on the inflation outlook has likely played a role in PHP underperformance this past week.
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USD/PHP is back close to 57.70, around 0.40% weaker in PHP terms for the session so far. This is in line with other SEA FX, with THB off around 0.40% and IDR down 0.35%.

  • The pair remains sub recent highs of 57.89 from earlier in the week. Focus is likely to remain on whether we can test 58.00 on the upside. Note the 20-day EMA sits back near 57.42, while the 50-day is around 56.96.
  • PHP weakness today is in line with regional trends, but it has underperformed over the past week, off nearly 0.50%, despite a softer USD backdrop elsewhere.
  • Earlier comments from BSP Governor Remolona are likely to reinforce risks around easier policy setting as we move into H2 of this year. The governor stating he is confident they can start the easing cycle in this period and that policy has been tighter than necessary.
  • He added they still have a hawkish bias but less so than before. Remolona sounded relaxed in terms of the FX backdrop, stating they have intervened only modestly recently, while FX reserve levels are comfortable.
  • Some sell-side analysts still see BSP easing as dependent on when the Fed starts cutting rates though. More dovish BSP rhetoric coupled with recent Fed push back on the inflation outlook has likely played a role in PHP underperformance this past week.