FX Daily: BSP pause today; USD/SGD breaks above 1.34

USD/PHP near year’s high; USD/SGD above 1.34.
Group Research, Philip Wee18 May 2023
    Photo credit: Unsplash Photo

    PHP depreciated 0.2% to 56.18 per USD. Today, we expect Bangko Sentral ng Pilipinas (BSP) to keep the overnight borrowing rate unchanged at 6.25%. Finance Secretary Benjamin Diokno and BSP Governor Felipe Medella had telegraphed a pause on cooling inflation. Diokno has a vote on the seven-member monetary policy board. Medella should reaffirm plans to lower the reserve requirement ratio later this year once markets are convinced that inflation is on a sustainable trend back into its 2-4% target. CPI inflation peaked at 8.7% YoY in January and fell to 6.6% in April; Medella thinks it could return to the target around October. The National Economic and Development Authority (NEDA) warned that past hikes (425 bps to 6.25% since May) would slow consumption and investment and sees the PHP’s lower level improving competitiveness for producers of local import substitute and for exporters. USD/PHP should test the year’s high of 56.4 again and eye the top of NEDA’s 53-57 range assumed for 2023 and 2024. 

    SGD depreciated 0.1% to 1.3420 per USD, extending its fall past 1.34. Singapore’s non-oil domestic exports contracted for the seventh month by 9.8% YoY in April, worse than the -8.3% in March. Electronics exports plunged for four consecutive months by more than 20%. The SGD NEER has been capped at 1% above the mid-point of its policy band in the past four months; the central bank did not surprise with an inter-meeting policy tightening in January. CPI inflation fell to 5.5% YoY in March, inside the MAS’s forecast for inflation to average 5.5-6.5% this year, justifying its decision to pause in April. USD/SGD remains a price-taker in the global currency market. Since the policy review in mid-April, the SGD’s depreciation has been consistent with those of Singapore’s major trading partners, especially those in export-led Asia.

    Quote of the day
    “Trouble shared is trouble halved.”
         Lee Iacocca

    18 May in history
    The first Indian film, Shree Pundalik, was released in 1901. 


    Philip Wee

    Senior FX Strategist - G3 & Asia

    Subscribe here to receive our economics & macro strategy materials.
    To unsubscribe, please click here.

    The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). This report is intended for “Accredited Investors” and “Institutional Investors” (defined under the Financial Advisers Act and Securities and Futures Act of Singapore, and their subsidiary legislation), as well as “Professional Investors” (defined under the Securities and Futures Ordinance of Hong Kong) only. It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation.  Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies.  The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation.  The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.

    This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.

    DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E. 

    DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability.  18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.

    DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability.  13th Floor One Island East, 18 Westlands Road, Quarry Bay, Hong Kong SAR

    Virtual currencies are highly speculative digital "virtual commodities", and are not currencies. It is not a financial product approved by the Taiwan Financial Supervisory Commission, and the safeguards of the existing investor protection regime does not apply.  The prices of virtual currencies may fluctuate greatly, and the investment risk is high. Before engaging in such transactions, the investor should carefully assess the risks, and seek its own independent advice.