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Marcos orders DoE shift to permit processing in parallel

PRESIDENT Ferdinand R. Marcos, Jr. said the Department of Energy’s (DoE) method of expediting power project approvals can be fine-tuned further by resorting to simultaneous permit processing, avoiding the waiting time caused by sequential approvals.

Mr. Marcos made the remarks at a Palace meeting about the DoE’s Energy Virtual One-Stop Shop (EVOSS), according to the Presidential Communications Office.

“Well, you continue to work on the permitting process,” he told DoE officials. “So, we try to get as close as possible to the simultaneous processing.”

In his third address to Congress, the President ordered the DoE to entrust to a digital one-stop shop its permit approval process for power projects.

As of Sept. 27, the DoE reported that at least 56 of 103 energy-related processes had been folded into EVOSS, which was rolled out in 2020.

The government is aiming for 100% integration of all energy-related application processes into EVOSS by June 2028.

At a Cabinet meeting, Mr. Marcos also told Energy Secretary Raphael P.M. Lotilla to inform agencies in advance about the DoE’s impending endorsement of a project to allow them to start their own permitting process right away.

The Energy Regulatory Commission said last year that EVOSS would cut the processing time for quasi-judicial rulings to 270 calendar days from more than a year previously.

Last week, the DoE said it has issued endorsements to eight renewable energy (RE) projects and one battery energy storage system.

The Board of Investments on Sept. 26 said it had endorsed P3.74 trillion worth of RE projects for green-lane treatment as of Sept. 25. The investment promotion agency said 114 RE projects had been endorsed to the One-Stop Action Center for Strategic Investments since February 2023.

The Philippines is trying to boost the share of RE in the energy mix to 35% from the current 22%, eventually rising to 50% by 2040.

Energy Undersecretary Sharon S. Garin has said battery technology is evolving fast enough for the Philippines to meet its RE targets. She said the agency was looking to attract more battery system companies to introduce their systems in the Philippines, which will help RE projects overcome the intermittent nature of their power sources. — John Victor D. Ordoñez

Nearly half-million doses of ASF vaccine due by mid-Oct.

REUTERS

THE Department of Agriculture (DA) said on Tuesday that it is expecting to deploy 490,000 doses of the African Swine Fever (ASF) vaccine by mid-October.

“By Oct. 17-19, the (Bureau of Animal Industry) will issue a notice to proceed with the 490,000 doses that were procured,” Assistant Secretary and Spokesperson Arnel V. de Mesa told reporters.

The DA has allocated P350 million for the initial government-run trial, sufficient to fund about 600,000 vials of the ASF vaccine from Vietnam.

“With those doses, hopefully, we can offer additional protection to our pigs,” he added.

Mr. De Mesa said that despite the ongoing outbreak, the meat supply is expected to be sufficient until the year-end holidays.

“Our requirements this holiday season were programmed during the second quarter of the year,” he added.

Pork imports during the first half increased 10.7% to 316.99 million kilograms.

“The imported meats are starting to arrive or have already arrived,” he said.

“Although we still have ASF within affected areas, this would be easily compensated for by supply coming in from other countries,” Mr. De Mesa added.

As of Sept. 20, 125 municipalities across 31 provinces had active ASF cases, the BAI reported.

The DA has set up checkpoints to monitor the movement of hogs outside active ASF areas. It is allowing healthy hogs within ASF-affected areas to travel after proper verification. — Adrian H. Halili

Doubts raised about crypto taxability in proposed digital-services VAT law

REUTERS

By Kenneth Christiane L. Basilio, Reporter

THE GOVERNMENT is likely to run into difficulty in trying to apply a digital-services value-added tax (VAT) to cryptocurrency traders, analysts said.

While acknowledging that the upcoming law could plausibly apply to crypto-related services, the analysts said the overseas crypto exchanges that comply with the law could simply pass on the cost of VAT to their users, raising the transaction cost and discouraging frequent trading.

Arlone Abello, executive director of Philippines Association of Crypto Traders, also warned in an e-mail that the impact of the tax on crypto trading could make optimistic tax revenue projections fail to materialize.

“Since VAT is typically passed on to consumers, traders may experience an increase in the cost of their transactions, as platforms adjust their pricing to accommodate the tax,” he said.

The tax on cryptocurrency transactions could steer users away from “compliant” exchanges registered with the government to skirt additional costs, Enrico P. Villanueva, a senior lecturer at the University of the Philippines Los Baños Economics Department, said in an X message.

“These can be double whammy for Filipino cryptocurrency users who will either be taxed heavily if they transact locally, or risk losing regulatory protection if they shift to unregistered platforms,” he said. 

It could even lead to the Philippines “losing its competitive edge as a hub for fintech” if other countries provide favorable tax regimes to foreign cryptocurrency service providers, Mr. Abello said. 

“Enforcing VAT collection on nonresident cryptocurrency exchanges will be challenging, especially with platforms that operate outside of formal regulatory frameworks,” he added. “The government may need to collaborate with international authorities or leverage blockchain’s inherent transparency to track transactions more effectively.”

Albay Rep. Jose Ma. Clemente S. Salceda has said that the National Government (NG) could earn up to P6 billion in VAT annually from taxing foreign cryptocurrency platforms.

He was speaking ahead of the expected signing this month of a measure imposing a 12% VAT on digital services by companies based outside the Philippines.

Mr. Salceda, however, cited the need to clarify whether the government can collect VAT on trading commissions or total transaction value.

“It is a digital product provided by non-resident service providers to Philippine residents. So, it should be covered by VAT,” he told BusinessWorld via Viber.

“Right now, the revenue gain could be as much as P6 billion, depending on the framework that we will use,” he added. “The main contention is whether the revenue is the service provided – and therefore, only commission is VATable – or the revenue is the whole transaction value.”

Mr. Salceda last week filed a resolution seeking hearings on the possibility of collecting digital VAT from cryptocurrency service providers based overseas. The House ways and means committee is also looking at possible additional fees that could be charged by the Securities and Exchange Commission (SEC), with discussions on the matter set in November.

“Nonresident exchanges focused on cryptocurrency may be subjected to VAT on the transaction fees they are charging users,” Jomel N. Manaig, a junior partner at tax and corporate law firm Du-Baladad and Associates, said in an e-mail.

The government has a “potent weapon” against cryptocurrency exchanges with questionable track records, Mr. Manaig said, citing regulators’ ability to block Philippine access to their platforms.

Nevertheless, the government should “actively understand cryptocurrency” before drafting regulations, he said. “Simply making rules to regulate cryptocurrency based on current — and often outdated — standards and systems would inevitably lead to loopholes and unreasonable compliance requirements.”

About 11 million Filipinos own cryptocurrency assets valued at P35 billion, with transaction value estimated at P106 billion, according to House Resolution No. 2029, which Mr. Salceda filed last week.

Mr. Salceda said the House committee is also working with the SEC to formulate a “policy framework” that would allow cryptocurrency platforms to operate in the Philippines while also providing Filipinos with regulatory protection.

“While it is impossible to fully onboard all cryptocurrency platforms into the Philippine regulatory ambit, consumers have some guarantee that their hard-earned assets are protected by Philippine law for platforms that choose to be regulated,” he added.

Net external liabilities fall 6.5% quarter on quarter at end-June

Bangko Sentral ng Pilipinas main office in Manila. — BW FILE PHOTO

THE Philippines’ net external liability position declined 6.5% at the end of June, the Bangko Sentral ng Pilipinas (BSP) said.

Citing preliminary data, the BSP said the international investment position (IIP) was a net external liability of $55.2 billion at the end of June, down 6.5% from the $59.1 billion net liability at the end of March.

“This development was driven by the 1.7% contraction in the country’s external financial liabilities, which outpaced the 0.5% decline in external financial assets,” the BSP said.

The IIP is an indicator of the value and composition of a country’s financial assets and liabilities. It gauges an economy’s external exposure.

External financial liabilities dropped 1.7% to $298.7 billion at the end of June, from $303.9 billion a quarter earlier.

“This development was primarily attributable to the recorded declines in net foreign portfolio investments (FPI) in the form of equity securities to $34.8 billion (by 11.3% from $39.2 billion) and net foreign direct investment (FDI) in the form of equity capital to $58.2 billion (by 6.5% from $62.2 billion), mainly on account of downward valuation adjustments.”

Year on year, external financial liabilities rose 6.4% from $280.7 billion.

The BSP attributed this to the “collective increases in the nonresidents’ net outstanding loans extended to residents by 16.1%, nonresidents’ net outstanding direct investments in debt instruments by 10.9%, and nonresidents’ net outstanding investment in portfolio debt securities by 11.2%.”

Other sectors accounted for 59% or $176.3 billion of total external financial liabilities at the end of June. The rest were held by the National Government and banks, with financial liabilities worth $78.9 billion (26.4%) and $39.8 billion (13.3%), respectively.

The BSP held 1.3% of all external financial liabilities at $3.8 billion.

Meanwhile, external financial assets dipped 0.5% to $243.5 billion at the end of June from $244.8 billion at the end of March.

The BSP attributed the decline in financial assets to the combined decreases in the outstanding value of residents’ net portfolio investments in foreign debt securities to $31.4 billion (by 6.2% from $33.4 billion), net direct investments in debt instruments to $41.9 billion (by 1.7% from $42.6 billion), and residents’ net placements of foreign currency and deposits in foreign banks to $14.4 billion (by 3.1% from $14.9 billion). — Luisa Maria Jacinta C. Jocson

Xiamen-based companies express interest in PHL investments — BoI

XINHUATHAI.COM

FIVE companies from Xiamen in southern China have expressed interest in investing in Philippine electric vehicle (EV) manufacturing, infrastructure, green metals, and mining projects, the Board of Investments (BoI) said.

In a statement on Tuesday, the BoI said that the companies indicated their interest in investing in the Philippines during a roundtable meeting in Xiamen last month.

A roundtable was also conducted in Beijing in conjunction with the ASEAN-China Center, the Power Battery Applications Committee of China Industrial Association of Power Sources, the China Overseas Development Association, and the RCEP Industry Cooperation Committee.

The BoI led a six-day investment promotion roadshow in China to attract investment that it hopes will position the Philippines as a regional hub for smart and sustainable manufacturing.

“Throughout the six days of the Investment Promotion Roadshow, we generated significant interest from various sectors,” Trade Undersecretary and BoI Managing Head Ceferino S. Rodolfo.

“Events like this showcase the Philippines’ proposition as the regional hub for smart and sustainable manufacturing and services industries that will ultimately generate green and sustainable jobs,” he added.

The BoI led the delegation at the 2024 China International Fair for Investment and Trade (CIFIT), which was focused on international investment promotion and economic and technological cooperation.

“For this year’s CIFIT, the Philippines highlighted the country’s investment promotion strategy and advantages as an investment destination for Chinese enterprises,” said the BoI.

“From Sept. 8 to 11, the Philippine booth saw a significant stream of visitors with business interests in renewable energy, new energy vehicles, food manufacturing, solar photovoltaic manufacturing, and trading activities,” it added.

Throughout the mission, the BoI and the Philippine Trade and Investment Center in China engaged with a total of 21 companies in renewable energy equipment manufacturing, EV manufacturing, and agribusiness.

So far this year, China was the 7th largest investment source for the BoI. It accounted for P1 billion of the investment approvals in the nine months to September, up 237% from a year earlier. — Justine Irish D. Tabile

China’s AIIB commits $100 million to support Asia-Pacific net-zero projects

REUTERS

BEIJING-BASED Asian Infrastructure Investment Bank (AIIB) has committed $100 million to help Asia-Pacific countries adopt low-carbon technologies and practices.

The AIIB said in a statement that $75 million was committed to the Actis Asia Climate Transition Fund, while $25 million will go towards co-investment.

“This marks AIIB’s first climate transition-themed fund dedicated to emerging Asia and highlights the Bank’s commitment to sustainable development and climate change mitigation in the region,” it said.

The fund will be invested in renewable energy infrastructure, energy solutions, and sustainable transportation in the region.

In particular, the commitment will support climate transition initiatives in India, Indonesia, Malaysia, China, the Philippines, Thailand, and Vietnam.

“Our commitment to the Actis Asia Climate Transition Fund underscores AIIB’s dedication to financing sustainable infrastructure and fostering low-carbon solutions in Asia,” AIIB Acting Vice-President Rajat Misra was quoted as saying.

“This partnership aligns with our climate strategy and sets a precedent for future investments aimed at achieving net-zero emissions while promoting gender equality in the energy sector.”

Separately, the Department of Finance (DoF) said the AIIB pledged to support Philippine infrastructure projects.

“The DoF was able to secure the Bank’s commitment to support the Philippine government in accessing grants through the Multilateral Cooperation Center for Development Finance (MCDF) Finance Facility with the AIIB as an implementing partner,” it said in a statement.

The MCDF is a multilateral financial mechanism promoting high-quality infrastructure and connectivity investments in developing countries.

The AIIB also affirmed the Philippine government’s call to assign specific country officials to improve its partnerships, the DoF said.

“Recognizing that project implementation delays equate to development denied, we request even stronger support from the Bank through regular comprehensive portfolio reviews to assist the government,” Finance Undersecretary Joven Z. Balbosa was quoted as saying. 

The DoF also cited the need for AIIB project teams to promptly identify project implementation issues, come up with potential solutions and strategies, and facilitate closer monitoring and coordination among relevant stakeholders.

Big-ticket projects supported by the AIIB include the Manila Flood Management project and the Bataan-Cavite Interlink Bridge. The bank co-finances these projects with the World Bank and the Asian Development Bank (ADB), respectively.

The government is also processing AIIB loans for key infrastructure projects like the Laguna Lakeshore Road Network Project – Phase 1 and the Metro Manila Rail Transit Line 4 (MRT4) Project, both co-financed with the ADB.

The bank also supports the Facility for Accelerating Studies for Infrastructure (FAST-Infra), which is expected to be signed this year. FAST backs the formulation of a transport infrastructure master plan. — Beatriz Marie D. Cruz

Dairy breeder herd to be expanded via imports

REUTERS

THE National Dairy Authority (NDA) said on Tuesday that it is looking to expand the herd at its stock farms ahead of plans to boost overall dairy animal numbers.

“The NDA will be aggressively importing cattle for our stock farms for the herd to multiply under the care of NDA. The acclimatized offspring of these dairy cattle will be the ones to be distributed to our dairy farmers,” Administrator Marcus Antonius T. Andaya said in a statement.

Mr. Andaya added that five new stock farms are set to be completed by the end of the year with operations set to launch by early 2025. They will be located in Nueva Ecija, Bohol, Bukidnon, Cotabato and Agusan Del Sur.

The NDA said that the new stock farms will eventually help increase the domestic dairy herd to about 80,000 head.

He said that the NDA is also focusing on increasing milk yields and providing training for farmers.

The NDA aims to increase dairy production to 80 million liters per year by 2028, equivalent to about 5% of milk demand. The agency operates in 68 provinces, assisting almost 2,500 farmers and 1,324 dairy organizations.

The Philippines can meet less than 1% of its milk demand through domestic production, with the remainder needing to be imported.

Dairy imports are forecast to increase 7.3% in 2024 to 2.49 million metric tons of milk equivalent, according to a report by the Food and Agriculture Organization of the United Nations.

In the first half, dairy imports rose 12.9% to 1.65 million metric tons. The Philippines typically imports skim milk powder, followed by other milk powders and ready-to-drink milk. — Adrian H. Halili

Minority legislators seek to realign P673B in confidential, intel funds

BW FILE PHOTO

MINORITY LEGISLATORS at the House of Representatives called for P673 billion worth of budget realignments to support agriculture programs and wage subsidies.

The Makabayan bloc proposed to reduce allocations for so-called confidential and intelligence funds to generate funding for the desired programs.

The legislators were lobbying for the changes to the proposed P6.352-trillion budget for next year, proposing also to realign funding from unprogrammed appropriations for foreign-assisted projects and road development projects of the Department of Public Works and Highways.

The proposal was submitted last week to a House small committee, which is responsible for overseeing individual amendments to the budget bill.

The Makabayan bloc members are Party-list Reps. Arlene D. Brosas, Raoul Danniel A. Manuel, and France L. Castro.

The proposed realignments “serve the best interests of our people,” according to a document outlining the proposed reallocations obtained by BusinessWorld.

The House approved House Bill No. 10800 or the General Appropriations Bill on final reading last week, ahead of its month-long break and 58 days after receiving the spending plan from the executive branch.

It adopted committee amendments to the spending plan during plenary deliberations while creating a small committee to address individual amendments to the budget bill, allowing the chamber to meet its self-imposed September deadline.

The Department of Agriculture, Sugar Regulatory Administration, and the National Food Authority (NFA) are to receive P390 billion in additional funding under Makabayan bloc’s budget proposal. Of this, P242 billion will go towards agricultural production subsidies for farmers, with P101 billion to fund the procurement of palay (unmilled rice) by the NFA.

“In order to help the farmers and fisherfolk affected by increasing costs of farm inputs, rising fuel prices, and calamities and typhoons, we propose to allocate funding for production subsidies,” according to the document.

The government’s rice development program’s budget would more than double under the Makabayan proposal to P90 billion from P31.39 billion.

The Labor, Trade and Migrant Workers departments are to collectively receive an additional P100.7 billion to boost wage subsidies and cash assistance programs under the proposal.

The Makabayan legislators backed an additional P40 billion for the Department of Trade and Industry to support wage subsidies for small businesses. The proposed subsidy program is to help keep small businesses stay afloat by providing P8,000 per worker.

“The Wage Subsidy Program for MSMEs (micro-, small- and medium-sized enterprises) in the 2025 budget (would) shoulder up to 70% of the minimum wage of workers in such enterprises,” according to the proposal.

The legislators also proposed P47.6 billion for the Labor department for a one-time cash assistance program worth P20,000 for the unemployed, as well as an additional P58.8 billion for the Health department to increase funding for public hospitals.

“To deliver the much-needed services to the people and to address the high household out-of-pocket expenses, we need to give sufficient budgets to the public hospitals,” the legislators said. — Kenneth Christiane L. Basilio

SB Corp., PFA tout franchising as path to creating more jobs

 

THE Department of Trade and Industry (DTI) said its financing unit, the Small Business Corp., has partnered with the Philippine Franchise Association (PFA) to promote franchising as a means of boosting entrepreneurship and job creation.

Acting Trade Secretary Cristina A. Roque said a memorandum of agreement (MoA) signed with the PFA aims to encourage micro, small, and medium enterprises to explore franchising.

“The best way to recover, bounce back, and grow is to get into franchising … with franchising, the chances of success are higher than failure because (the business concept) has been tested,” she added.

As part of the partnership, SB Corp. President and Chief Executive Officer Robert C. Bastillo said the company will be launching new loan programs this month, including a franchise funding facility.

“We will announce that (the facility) is open and that anybody can avail of our loan programs. And since we signed this MoA, it will speed things up,” Mr. Bastillo said.

“The guidelines are ready, so all we have to do really is launch it. And our plan is that during the launch, we will invite 50 potential franchisees, and process (their loan applications) on the same day,” he said.

“We will have our credit committee here as well to deliberate on the approval within the same day,” he added.

According to Mr. Bastillo, SB Corp. is ready to allocate up to P1 billion for the franchise funding program.

PFA Chairman Chris Lim said the partnership will help the Philippines achieve its goal of being a middle-income country by 2040.

“We love this MoA because it really tackles the different aspects that can help us do this. Firstly is education, not just locally but also for our overseas Filipino workers (OFWs), where I think there’s a lot of untapped value,” he said.

“We want to really create jobs for OFWs so they can come back here to be with their families,” he added.

He said SB Corp. funding will go a long way in addressing the lack of access capital for many entrepreneurs.

“We also know that the DTI mentors a lot of suppliers all over the Philippines. And we want to be able to link up with them, together with franchisors and franchisees,” he said.

“The last part of the MoA was really (about) how we can develop more global Filipino brands… because we know that it will also bring in investments and dollar income,” he said. — Justine Irish D. Tabile

PHL sustainable finance framework leaves room for interpretation — IEEFA

RAWPIXEL/FREEPIK

THE Philippine framework on sustainable finance is prone to subjective interpretations in the absence of quantitative criteria, according to the Institute for Energy Economics and Financial Analysis (IEEFA).

According to a report written by Ramnath N. Iyer, IEEFA’s sustainable finance lead for Asia, the Philippine and Malaysian frameworks take a largely “principles-based approaches.”

“The absence of any quantitative criteria risks rendering assessments based on such taxonomies insubstantial and unlikely to be considered internationally interoperable,” according to the report.

The frameworks contain classifications such as “high emitting, transitioning, or low emitting,” making them subject to interpretation, IEEFA said.

“Consequently, market players may have disagreements due to the ambiguous guidelines,” according to the report.

The taxonomy for sustainable finance lays down criteria for determining the sustainability attributes of various economic and financing activities, classifying them as eligible or ineligible, the IEFFA said.

“The growing awareness and use of sustainable finance in recent years has led to demands for organized methodologies or taxonomies to classify ‘sustainable’ activities, the financing of which could then qualify as sustainable finance,” it said.

The report examined taxonomies or documents that substitute for taxonomies in Asia, primarily in Singapore, Hong Kong, Indonesia, Thailand, the Philippines, Malaysia, South Korea, China, as well as the Association of Southeast Asian Nations (ASEAN) taxonomy.

The Philippine taxonomy covers the energy, transport, waste, industry, and agriculture sectors, the IEEFA said.

Compared to Singapore, which was considered to have the most comprehensive taxonomy, other countries such as the Philippines, Malaysia, and Indonesia have adopted “less rigorous approaches.”

The report said that Singapore’s taxonomy covers “a broad range of sectors with detailed technical criteria to help assess the eligibility of any activity.”

The ASEAN Taxonomy for Sustainable Finance, along with the frameworks of Singapore, Thailand, Indonesia, and the Philippines, implemented a three-tiered system to categorize activities into green (compliant), amber (transitioning), and red (non-compliant).

“A comprehensive taxonomy needs quantitative or logical criteria based on accepted science to classify activities into different categories for clarity, credibility, and avoidance of greenwashing,” the report said.

The IEEFA said that “well-designed taxonomies can effectively guide investments toward environmentally beneficial activities and foster a sustainable financial ecosystem, ensuring the transition to a greener economy is accelerated, effective, and equitable.” — Sheldeen Joy Talavera

UN estimates funding need of $743M to achieve PHL dev’t framework goals

PHILSTAR FILE PHOTO

THE United Nations (UN) said it needs about $743 million until 2028 to support human capital investments, job-quality improvements, and accelerated climate action in the Philippines.

The targeted projects fall under the 2024-2028 UN Sustainable Development Cooperation Framework, which is designed to help the Philippines achieve its national development priorities.

“The current value of the framework sits at around… $743 million, so this is what we call like the required resources to do the work that has been set up,” Matija Kovač, head of office at the UN Resident Coordinator, said at a briefing on Tuesday.

“At this stage, a little bit less than half is actually secured,” he added.

Mr. Kovač noted that the estimate cited is the funding requirement as of April and is subject to revision by year’s end.

The framework focuses on three strategic priorities: human capital development; sustainable economic development, decent work, innovation; and climate action, environmental sustainability, and disaster resilience.

For 2024, the Philippines will need $231 million, with $179 million available and $52 million yet to be sourced.

The country will need $158 million in 2025, $143 million in 2026, $120 million in 2027, and $92 million in 2028.

Between 2024 to 2028, the UN has obtained around $342 million to fund the implementation of its country strategy, Mr. Kovač said.

The UN estimates that around 30% of the secured funding comes from multi-partner funds, while 28% comes from bilateral sources like Australia, Japan and South Korea, 20% sourced from multilateral partners, and 10% from core and domestic resources.

“This is an investment and we are mobilizing resources, and although we still have a gap, the likelihood of getting these figures is very high,” Gustavo González, UN Resident Coordinator and Humanitarian Coordinator, told the briefing.

Leila Saiji Joudane, Country Representative for the UN Population Fund Philippines, said the UN has secured 72% of the $120 million for human capital development projects.

This will fund better healthcare access; school feeding; alternative learning systems, and comprehensive sexuality education; child protection systems; and public services and digitalization, among others.

Ms. Joudane cited the importance of investing in human capital development, with 60% of the Philippine population deemed in the “productive” age cohorts. — Beatriz Marie D. Cruz

Peso drops vs dollar on Powell comments

BW FILE PHOTO

THE PESO weakened against the dollar on Tuesday following cautious comments from the US Federal Reserve chief and amid the conflict in the Middle East.

The local unit closed at P56.145 per dollar on Tuesday, declining by 11.5 centavos from its P56.03 finish on Monday, Bankers Association of the Philippines data showed.

The peso opened Tuesday’s session weaker at P56.20 against the dollar. Its intraday best was at P56.09, while it dropped to as low as P56.32 versus the greenback.

Dollars exchanged surged to $2.22 billion on Tuesday from $1.29 billion on Monday.

The peso dropped as the dollar was stronger after cautious remarks from Fed Chair Jerome H. Powell and amid the escalating conflict in the Middle East, a trader said by phone.

Mr. Powell’s comments were in contrast to the Bangko Sentral ng Pilipinas’ (BSP) chief’s dovish tone, which put pressure on the peso, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The US dollar rallied broadly on Tuesday after Mr. Powell pushed back against bets on more supersized interest rate cuts, Reuters reported.

Mr. Powell adopted a more hawkish tone in a speech at a conference in Tennessee, saying the world’s biggest central bank would likely stick with quarter-percentage-point interest rate cuts moving forward.

“This is not a committee that feels like it is in a hurry to cut rates quickly,” he said.

Traders remain certain that the Fed will cut again at the next policy setting meeting in November, but slashed expectations for a 50-basis-point (bp) reduction to 35.4% from 53.3% a day earlier, according to CME Group’s FedWatch Tool.

The Fed kicked off its easing cycle with a larger-than-expected half-point reduction last month, bringing its target rate to the 4.75%-5% range.

The dollar index rose 0.1% to 100.87 as of 0403 GMT, after pushing 0.3% higher on Monday, when it posted a third successive monthly decline, with a near 1% fall in September.

The dollar was up 0.3% at 144.01 yen, after whipsawing from as high as 146.495 yen on Friday to as low as 141.65 yen on Monday.

Meanwhile, BSP Governor Eli M. Remolona, Jr. last week said the Monetary Board could slash benchmark interest rates by 50 bps more this year via two 25-bp cuts each at its next two meetings scheduled for Oct. 16 and Dec. 19.

The BSP kicked off its easing cycle in August, cutting its policy rate by 25 bps to 6.25% from the over 17-year high of 6.5%.

For Wednesday, the trader sees the peso moving between P56 and P56.50 per dollar, while Mr. Ricafort expects it to range from P56.05 to P56.25 — A.M.C. Sy with Reuters

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