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USD/PHP Breaks Above 58.00, Underlining Weak Q2 Performance To Date

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USD/PHP spot has risen to fresh highs above 58.00 (last 58.11). We are 0.40% weaker in PHP terms. This is fresh lows for PHP going back to Nov 2022. Highs back during this period were marked around 59.00.

  • Peso weakness has been particularly evident in Q2 to date. The currency is comfortably the worst performer in the EM Asia FX space over this period, down just over 3% (KRW is the next worst off 1.2%). This contrasts with Q1 where PHP was the second best performer in the space (behind INR), albeit still down slightly versus the USD.
  • Some pay back has been evident in Q2. Yesterday's overall BoP figure swung back into deficit for April, suggesting some external balance headwinds. Remittance growth has also slowed, albeit remaining in positive y/y territory.
  • Broader USD sentiment is not helping, as Fed officials caution against being too optimistic on the inflation outlook. This coupled with a more dovish BSP update last week, opening the door for H2 rate cuts, has likely weighed at the margins as well.
  • BSP has said it would take a more hands off approach around FX this year, although we did see rhetoric step up on the recent run towards 58.00. Hence today's price action may be a little surprising to the market.
  • Focus will now be on whether we see officials resume comments and or BSP intervene to curb this fresh round of PHP weakness.
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USD/PHP spot has risen to fresh highs above 58.00 (last 58.11). We are 0.40% weaker in PHP terms. This is fresh lows for PHP going back to Nov 2022. Highs back during this period were marked around 59.00.

  • Peso weakness has been particularly evident in Q2 to date. The currency is comfortably the worst performer in the EM Asia FX space over this period, down just over 3% (KRW is the next worst off 1.2%). This contrasts with Q1 where PHP was the second best performer in the space (behind INR), albeit still down slightly versus the USD.
  • Some pay back has been evident in Q2. Yesterday's overall BoP figure swung back into deficit for April, suggesting some external balance headwinds. Remittance growth has also slowed, albeit remaining in positive y/y territory.
  • Broader USD sentiment is not helping, as Fed officials caution against being too optimistic on the inflation outlook. This coupled with a more dovish BSP update last week, opening the door for H2 rate cuts, has likely weighed at the margins as well.
  • BSP has said it would take a more hands off approach around FX this year, although we did see rhetoric step up on the recent run towards 58.00. Hence today's price action may be a little surprising to the market.
  • Focus will now be on whether we see officials resume comments and or BSP intervene to curb this fresh round of PHP weakness.