BENGALURU: The Philippine peso pared some losses, while equities advanced after the country’s central bank kept interest rates steady and signalled that the inflation outlook is moderating.
The Philippine peso fell 0.1% to 55.760 against the greenback after falling as much as 0.4% earlier in the session. Equities in the region gained 0.3%.
The Bangko Sentral ng Pilipinas (BSP) kept interest rates steady at 6.5%, as widely expected, after the inflation outlook moderated.
“Despite today’s pause, we believe BSP will remain ready to hike rates in the near term given its latest risk-adjusted inflation forecast for 2024” Nicholas Mapa, a senior economist at ING wrote in a note.
“The lagged impact of previous policy rate hikes should continue to weigh on growth well into 2024. The PHP will likely move sideways but benefit from the hawkish signals coming from the BSP.”
Other currencies in the region declined after posting strong gains a day earlier following a mixed set of US data that helped the dollar recover, and mounting pressure on riskier Asian currencies.
US data overnight showed retail sales for October fell less than expected while producer prices fell the most in 3-1/2-years last month, a mixed set of indicators that reinforced expectations that the Federal Reserve’s tightening cycle was over while suggesting rate cuts won’t come in a hurry.
The move in the dollar is partly a technical rebound from the previous day’s steep fall after the inflation data, Shaun Lim, foreign exchange strategist at Maybank said. The US dollar was last trading at 104.470 against a basket of other currencies while the US Treasury yields rebounded from a two month-low overnight.
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