SINGAPORE: The Philippine peso extended gains in offshore markets on Thursday after the central bank raised both the benchmark interest rate and the rate on its special deposit accounts in its most aggressive move against inflation.
Bangko Sentral ng Pilipinas hiked the overnight borrowing rate to 4.0 percent, a level not seen since July 2012, and the SDA rate to 2.50 percent.
The central bank also raised its inflation estimates for 2014 to 2016, a senior official said.
After the move, the peso's one-month non-deliverable forwards (NDFs) hit a session high of 43.79 per dollar, up 0.3 percent from Wednesday's close.
"The statement reads fairly hawkish, so wouldn't be surprised to see another hike before year end," said Jonathan Cavenagh, senior FX strategist with Westpac in Singapore.
"It should help the PHP outperform," he added.
Before the central bank decision, spot peso closed in Manila up 0.2 percent at 43.855, as most emerging Asian currencies edged up.
Regional units found support from some hopes of more economic stimulus from China and as the dollar dipped against a basket of major currencies.
The South Korean won, however, hit a near five-week low against the dollar as offshore hedge funds chased the greenback for catch-up plays after local holidays.
The foreign exchange authorities were suspected of intervening to stem its appreciation trend as the won hovered near a six-year high against the yen, some traders said.
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