USD/PHP Plays Catch Up, YTD Gains Almost Gone

Spot USD/PHP is noticeably firmer today. The pair up around 1.15% at this stage, taking us back to 55.50/55. This is fresh highs back to early Jan. Note onshore markets were closed on Friday, so some of this reflects catch up given the generally supportive USD backdrop. The 100-day EMA is nearby, just under 55.60. Note the simple 200-day MA sits slightly higher at 55.75.

• PHP is one of three EM Asia currencies to still show positive gains for 2023 to date (with IDR and TWD being the others).
• There still seems scope for USD/PHP to catch up to the topside, given the rebound in core yields, particularly in the US. The Philippines current account/trade deficit position should still leave it vulnerable to such moves.
• BSP Governor Medalla was on the wires again today. He sounded optimistic around the inflation (sub 4% by Q4) and growth (+6% this year) outlooks. He added that the central bank is still on a tightening path, but has confidence the government can get supply side inflation pressures under control. The comments haven't been hawkish enough to aid the PHP.
• This follows Friday's comments where the Governor stated another 25bps hike was likely at the next meeting, which is towards the end of March. Note Feb CPI prints on March 7.