Peso hits fresh low as external pressures intensify
From AB Capital's The Opening Bell: Three Moves
Event
The Php fell to a new record low of P61.3/US$, breaching the P61 level for the first time, weighed by rising oil prices, broad dollar strength, and importer demand. Brent crude climbed back above US$110/bbl after continued disruption in the Strait of Hormuz, while market expectations for US rates to stay higher for longer also remained a headwind for emerging market FX.
View
The move appears driven more by external pressures than a sharp change in domestic fundamentals. Higher oil prices raise dollar demand while lifting inflation expectations, narrowing BSP policy flexibility. Php weakness also risks second-round effects, particularly through fuel and transport costs, reinforcing near-term inflation upside risks.
Catalyst
Key drivers include oil prices, developments in the US-Iran conflict, and signals from the Fed. If Brent remains elevated and the dollar stays firm, the Php could continue to trade with a weaker bias. Any easing in geopolitical tensions or pullback in oil prices could help stabilize the Php.
Action
We think positioning should remain cautious on FX-sensitive sectors. Import-dependent firms and fuel-intensive names face cost pressures, while exporters and companies with dollar revenues may benefit.
Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.
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