PHP: Maintaining Steady Trend, BSP Governor Speaks On FX/Policy
USD/PHP has stabilized above 55.50 in recent weeks. The pair was last near 55.60/65, little changed in the first part of Friday trade. We are also little changed over the past week, only outperforming HKD and INR in the Asian FX space. We are sub all key EMAs for USD/PHP, with the declining 20-day last near 55.89 on the topside. Earlier May lows in the pair were at 55.2350.
- BSP Governor Remolona has been across the news wires. On FX he noted that the central bank doesn't look at daily FX moves but rather monthly trends and that they have threshold around FX intervention.
- There may be speculation around intervention recently, given the more stable USD/PHP backdrop. The pair may also be less on the radar given recent macro drivers in USD/Asia have been more focused on FX hedging/repatriation flows, which is more associated with other markets like South Korea and Taiwan in the region.
- Philippines has a FX deposit base but it sub that of some other economies in SEA like Malaysia.
- On policy, Remolona stated that there is amply room to cut rates further but the central bank must move carefully. Remolona there is scope for 2 more cuts this year, but not necessarily back to back moves. A RRR cut may come next year.
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