Things Are Looking Up for the Philippine Peso
(Bloomberg) -- Things are looking up for the Philippine peso after it suffered one of the biggest losses in the region in the first half of the year.
The peso has outperformed all its Asian peers since mid-year, supported by increasing expectations of another central bank rate hike at the Aug. 9 policy meeting. Technical indicators suggest the currency has more room to recover.
Charts show that bullish momentum is growing for the peso.
Spot dollar-peso has fallen below its 50-day moving average support for the first time since May 11. The moving average convergence-divergence momentum indicator has declined bearishly below the signal line and zero. Another momentum signal, the slow stochastics, also remains bearish.
The peso lost 6 percent against the dollar this year and was at 53.13 on Friday. Immediate support for the dollar-peso is seen at 52.643, which is the 23.6 percent Fibonacci retracement of move up between January 5 to June 27.
“The break of 53 opens the door to a much larger correction for the greenback towards the 52.50-52.75 levels,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc., the nation's largest bank by assets. “This is supported by fundamentals. The market is anticipating tighter monetary policy after the central bank signaled strong action to address inflation.”
Bangko Sentral ng Pilipinas reiterated this week it is ready to take “decisive and measured policy actions” to bring inflation back to target of 2 percent to 4 percent next year. Governor Nestor Espenilla pledged “strong” action at the August rate meeting after raising the benchmark rate by a total of 50 basis points in May and June to 3.50 percent.
“The market has already priced in the strong dollar,” Ravelas said. “The market is now looking at interest-rate hikes on the domestic front. And it's not a question whether the central bank will raise rates but by how much.”
--With assistance from Ditas Lopez.
To contact the reporter on this story: David Finnerty in Singapore at dfinnerty4@bloomberg.net
To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net, Patricia Lui, Andrew Janes
©2018 Bloomberg L.P.
-
A New Samvat Wishlist: Inclusive Prosperity And Human Development
India has strengthened its economic foundations through infrastructure, digital access and enterprise. Its next growth chapter must deepen productivity, create better livelihoods and widen participation in prosperity.
-
Love, Sex Aur Dhokha: The Audacious Plot To Spy On Jensen Huang
A Taipei dinner, a Singapore chip buyer and a suspected Chinese asset: inside the alleged spy operation that got close to NVIDIA's Jensen Huang.
-
Ten Things I Learnt This Samvat
Patience can be a trap. Cheap stocks can stay cheap. Leverage can wipe you out. What did Samvat 2082 teach us? Niraj Shah writes on 10 lessons from the year gone by.
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
