Philippine Peso: Official jawboning slows depreciation – OCBC

OCBC’s Sim Moh Siong and Christopher Wong note that the Philippine Peso (PHP) has recovered modestly as authorities, including President Marcos and Bangko Sentral ng Pilipinas (BSP) officials, step up rhetoric against further weakness. While stronger jawboning may temper one-sided depreciation expectations, elevated Oil prices and inflation risks keep the bank cautious. USD/PHP retains bullish momentum with support at 63.62 and resistance near 64.18/20.

Rhetoric supports Peso near term

"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)."