Philippine Peso: Bearish but constrained by Oil – OCBC

OCBC strategists Christopher Wong and Sim Moh Siong note Philippine Peso (PHP) remains under pressure even after a larger-than-expected 50bp Bangko Sentral ng Pilipinas (BSP) hike to 5.50%, reflecting persistent inflation concerns. Higher rates may temper depreciation but are unlikely to fully offset elevated Oil prices, external imbalances and domestic growth worries. OCBC keeps a cautious stance, saying a sustained PHP recovery needs lower Oil and a better external backdrop.

Rate hikes fail to lift Peso sentiment

"PHP remained under pressure despite BSP’s larger-than-expected 50bp rate hike to 5.50%. The decision reflects growing concerns over inflation persistence, with BSP raising its 2027 inflation forecast to 6% from 5.4%, amid elevated oil prices and potential El Niño-related food price pressures."

"We remain cautious on PHP. Higher rates may help temper depreciation pressure, but elevated oil prices, external imbalances and concerns over domestic growth remain constraints. Further tightening also comes at a cost to an already slowing economy."

"For now, a more sustained PHP recovery would likely require some easing in oil prices and an improvement in the broader external backdrop."

"Daily momentum is mild bullish while RSI enters into overbought conditions. 2-way trades near recent highs not ruled out. Immediate resistance at 63.65, 63.85 levels (recent high). Support at 63 levels (21 DMA), 62.65 (21 DMA)."