Philippine financial markets are in a consolidation phase, with the peso and equities under pressure as tighter monetary conditions and inflation concerns weigh on sentiment.
The peso weakened for a second straight week. Michael Ricafort of Rizal Commercial Banking Corp. said the currency fell by 1.1 percent week on week, extending the previous 0.1 percent decline. Seasonal inflows from remittances and tuition related conversions have provided some support, but the peso remains near record lows. A retest of 60.84 is possible, with near term support around 60.00 and deeper support in the high 58 range.
Equities are also losing ground. The Philippine Stock Exchange Index dropped 0.9 percent for the week after a 1.6 percent fall previously, slipping below the 6,000 level. Foreign selling continued, with net outflows of 41.1 million US dollars for the week, though this was lower than the prior week’s 79.2 million US dollars.
Sentiment remains cautious following the Bangko Sentral ng Pilipinas rate hike of 25 basis points to 4.5 percent, alongside elevated oil prices that keep inflation risks in focus. Thin liquidity and negative breadth suggest limited near term upside.
2TradeAsia expects the market to remain range bound, with support near 5,800 and resistance around 6,050 to 6,300.
A potential medium term catalyst is the inclusion of Philippine bonds in JPMorgan Chase Emerging Market Local Bond Index by January 2027, with a 1.78 percent weight, which could support future inflows.
For now, markets are likely to stay volatile, with investors focusing on fundamentally strong companies that can navigate a higher rate environment.
