Peso slips against US dollar as Philippine central bank surprises with rate cut
The Philippine peso weakened a shade while equities slid further after the central bank unexpectedly cut interest rates on Thursday, though stock markets elsewhere in emerging Asia rallied on renewed AI-related buying.
The peso closed at P58.235 versus the US dollar on Thursday, while the equity benchmark gauge, trading largely in the red through the day, slipped a few additional points after the Bangko Sentral ng Pilipinas (BSP) delivered a surprise quarter-point rate cut.
This was the fourth consecutive easing by the central bank, which warned that the Philippine growth outlook had weakened, though inflation expectations remained well-contained.
“Today’s unexpected move comes in the wake of September’s softer-than-expected CPI reading, which seems to have tipped the balance towards more easing,” said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.
“Our core view now is that the Board will cut again at the next meeting, to a terminal level of 4.50%, given its decidedly more dovish October statement.”
Broadly, the MSCI index of emerging Asian equities, which had slipped more than 1% in the previous session, rose 0.2%, while the broader MSCI Asia-Pacific ex-Japan index nudged 0.3% higher.
Overnight, Wall Street hit fresh highs as a renewed AI tech rally offset concerns about a prolonged US government shutdown and the lack of major economic data.
Wall Street’s strong performance, coupled with renewed participation from Chinese investors, has provided ample liquidity for equities, said Capital.com analyst Kyle Rodda.
“I think the AI rally never went away – at best, it took a breath. The trend remains very strong.”
In Taipei, the benchmark climbed as much as 1.5%, marking its fourth record high in five sessions on the AI surge.
Indonesia and Malaysia rose 0.4% and 0.1%, respectively, while Singapore’s index eased slightly.
Thailandís benchmark jumped 0.9% to its highest level since February after the Bank of Thailand kept rates on hold on Wednesday, but signaled potential easing if growth slows further. The baht fell to its lowest since late August.
“While the Bank of Thailand held rates yesterday, it appears to be a dovish hold, with the macro picture still looking benign,” said Lloyd Chan, a senior currency analyst with MUFG.
“Further BOT policy easing, along with recent increase in fiscal support, have likely lent support for Thai equities.”
Other currencies in emerging Asia traded in a tight range against a steady U.S. dollar on Thursday. The Singapore dollar and its Taiwanese counterpart nudged lower, while the Indonesian rupiah was flat. — Reuters
