Philippine Peso depreciates more slowly as officials intervene verbally – OCBC

Elevated oil prices and inflation risks underpin OCBC’s cautious stance on the Philippine Peso (PHP), despite a modest recovery as President Marcos and Bangko Sentral ng Pilipinas (BSP) officials intensify their warnings against further currency weakness. According to OCBC’s Sim Moh Siong and Christopher Wong, firmer verbal intervention may curb one-sided expectations of depreciation. Bullish momentum remains intact in USD/PHP, with 63.62 providing support and resistance around 64.18/20.

Peso finds near-term support in official rhetoric

"PHP recovered modestly yesterday after printing weaker on multiple sessions. Philippine authorities stepped up their rhetoric against further currency weakness. President Marcos said the government remained committed to defending PHP and had the necessary tools to do so."

"His comments followed a meeting with BSP Governor Remolona and other economic officials, after last week’s larger-than-expected 50bp rate hike. The increasingly vocal response suggests that policymakers are becoming more concerned about the pace of depreciation and its implications for imported inflation."

"We remain cautious on PHP, although stronger official rhetoric could help discourage one-sided depreciation expectations in the near term. BSP has already demonstrated its willingness to tighten policy to contain inflation risks, but further rate increases come with costs to domestic growth."

"With oil prices still elevated, underlying USD demand is unlikely to ease quickly. We would watch for further BSP communication and whether the latest PHP recovery can extend beyond a short-lived response to official remarks."

"Bullish momentum on daily chart intact though RSI turned lower from overbought conditions. Some retracement is not ruled out. Support at 63.62 levels. Resistance at 64.18/20 levels (recent high)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)