Peso pressure deepens as oil and politics weigh
From AB Capital's The Opening Bell: Three Moves
Event
The PHP weakened to a new record low of P61.75/US$ as Brent stayed above US$110 and the Strait of Hormuz remained closed. YTD depreciation has reached 4.8%, with oil-related dollar demand and thin liquidity amplifying pressure.
View
In our view, the PHP is now reflecting both external and domestic risk premiums. Higher oil prices widen the import bill and raise inflation risk, while political uncertainty adds sentiment pressure. At these levels, momentum and positioning can magnify daily FX moves.
Catalyst
Key variables include oil prices, Fed repricing, and BSP intervention. If Brent remains above US$110 and Fed hike odds rise further, we think the peso could test P62. Stabilization requires oil de-escalation, stronger reserve confidence, or clearer policy response.
Action
We think investors should stay cautious on import-heavy and FX-sensitive sectors. Favor exporters, dollar earners, and firms with natural hedges. Banks remain relatively resilient, but prolonged peso weakness could delay easing, pressure valuations, and increase credit risk in vulnerable segments.
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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