The Philippine peso remains under pressure even after the Bangko Sentral ng Pilipinas raised its policy rate by a larger-than-expected 50 basis points to 5.50 percent, according to OCBC strategists. The bank’s analysts said higher rates may help temper depreciation, but other forces are still pulling the currency lower.
Constraints beyond interest rates
OCBC pointed to elevated oil prices, external imbalances and concerns over domestic growth as the main constraints. The strategists said further tightening also comes at a cost to an economy that is already slowing.
The BSP raised its 2027 inflation forecast to 6 percent from 5.4 percent, citing elevated oil prices and possible El Niño-related food price pressures.
What a sustained recovery would need
OCBC’s strategists said a more durable recovery in the peso would likely require some easing in oil prices. They also said it would need an improvement in the broader external backdrop.
On the charts, OCBC described daily momentum on the peso as mildly bullish, with the relative strength index entering overbought territory. Immediate resistance is seen at 63.65 and 63.85 pesos per dollar, while support sits at 63 and 62.65 on the 21-day moving average.
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Source: OCBC
