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Top 10 trends in global public debt in 2023

Continuing this column’s “Top 10” series for 2023, we look at government debt indicators. Below are the 20 countries with the largest public debt (Russia is the 20th) plus six other major indebted Asian countries. Here are the emerging trends.

1. The US remains the most indebted country in the world with $31 trillion in 2022. By end-2023, this has gone up to $34 trillion, according to the latest data from fiscaldata/treasury.gov. China, with $14 trillion in 2022, is second and Japan, with $11.1 trillion, is third but this is a decline from $13.1 trillion in 2022.

2. A big jump in public debt occurred in 2020 during the dictatorial global lockdown and the mandatory shutdown of many tax-paying businesses. This happened while expenditures kept rising as governments continued paying their personnel and bureaucracies plus creating new welfare programs. All countries in the table accompanying this story showed this trend except Brazil, Mexico, Argentina, and Pakistan. I think the decline was due to their currency appreciation that affected the conversion to US dollar value. Then these four countries’ public debt jumped in 2022.

3. The Philippines breached the $200-billion mark with $224.6-billion public debt in 2021. It then rose to $232.5 billion in 2022. Vietnam was correct not to have breached the $200 billion in debt level.

4. The government debt/GDP ratio jumped in 2020 for all countries in the table. From 2019-2020, these countries had big increases in percentage points: the US went from 109% to 134%, the UK from 85% to 105%, Italy from 134% to 155%, Canada from 90% to 119%. In Asia, it seems that the Philippines has had the biggest increase, from 37% to 52%. The countries that saw the smallest increases were Bangladesh, Vietnam, and Pakistan.

5.  The debt/GDP ratio in 2022 has declined from 2020 levels except seven Asian countries. These were China, Japan, South Korea, Singapore, Thailand, the Philippines, and Bangladesh. It seems many of these Asian countries contracted long-term debt that remained high even after dictatorial lockdowns were lifted in most countries.

6. The peak rates of 10-year government Treasury bonds doubled or tripled from 2019 to 2022 for Europeans. This was also the case for Japan, South Korea, and Australia. US rates touched 5% in some intra-day trading sometime last October (see table).

7. All G7 industrialized countries except Germany have debt/GDP ratios above 100%. This means fiscal discipline and responsibility is not in their vocabulary as they keep inventing new ways of spending (welfare, war, etc.) on top of existing ones. Asian countries, except Japan and Singapore, have ratios below 100% and somehow practice fiscal restraint.

8. Some rich countries suffered credit rating downgrades. The US went from Moody’s Aaa stable to Aaa negative last November. France went down from S&P’s AA stable to AA negative in December 2022. Italy went from S&P’s BBB positive to BBB stable in July 2022. In a way these are indicators of waning trust in their financial and fiscal capacity to service their long-term debt obligations.

9. The rise in price and value of alternatives to fiat money are additional indicators that many investors are slowly shying away from the US dollar and other currencies, anticipating small to big crashes in value. Gold is at an all-time high at $2,000+ per troy ounce, Bitcoin is recovering to $45,000+ and Ethereum is recovering to $2,300+, among others. Countries holding tens or hundreds of billions of dollars in US public debt will be scratching their heads if the dollar value would significantly depreciate and crash.

10. Most countries and governments are trending towards more profligate public spending and expanded borrowing instead of practicing more fiscal discipline and restraints. The Philippines and other Asian countries should actively and consciously aspire to reduce their debt/GDP ratio and retire much of their public debt — not via higher taxation but the privatization of certain government assets and corporations.

The Philippines’ economic team, headed by Finance Secretary Benjamin Diokno, has been very explicit about their stated goal of reducing the country’s debt/GDP ratio to below 60% by 2025, reducing the deficit/GDP ratio to 3% by 2028. I support their fiscal goal and I would add that we should aspire to have a debt/GDP ratio of 37% or lower by 2028. The numerator (public debt) should significantly decline via privatization of government assets. The denominator (GDP size) should keep expanding, with growth of 6-8% yearly. With more market-oriented reforms to encourage more private business dynamism and competition, the ratio will decline.

 

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.

minimalgovernment@gmail.com

Philippines drops a notch in future readiness list

The Philippines slipped a notch to 82nd out of 124 countries with an overall score of 38.15 out of possible 100 in the 2023 edition of the Future Readiness Economic Index (FREI) by the Descartes Institute. The index assesses the state of the countries’ future readiness and their efforts to stimulate greater sustainable, inclusive growth with digital transformation as an integral factor. The Philippines was the fourth lowest among its peers in the region.

 

Philippines drops a notch in future readiness list

Gov’t fully awards fresh 3-year bonds

BW FILE PHOTO

THE GOVERNMENT made a full award of the new three-year bonds it offered on Wednesday even as the coupon was higher than secondary market levels following the increase in global crude oil prices amid geopolitical tensions.

The Bureau of the Treasury (BTr) raised P30 billion as planned from the fresh three-year bonds it auctioned off on Wednesday as total bids reached P53.279 billion, almost twice as much as the program.

The bonds were awarded at a coupon rate of 6%. Accepted yields ranged from 5.75% to 6% for an average rate of 5.9%.

The coupon fetched for the tenor was 7.9 basis points (bps) higher than the 5.921% quoted for the three-year bond at the secondary market prior to the auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

“Bond yields ticked higher this week, tracking the increase in global crude oil prices amid the ongoing conflict in the Red Sea,” a trader said in an e-mail.

The 10-year US Treasury yield briefly popped above 4% overnight for the first time in two weeks before closing at 3.9406%, up 8 basis points on the day, Reuters reported.

Early on Wednesday, oil prices were marginally higher after closing lower on Tuesday. US crude futures drifted 0.1% higher to $70.43 a barrel, after dropping more than 1% on Tuesday, while Brent was flat at $75.86 a barrel.

Iranian-backed Houthis rebels in Yemen have vowed to continue their attacks on shipping in the Rea Sea until Israel halts the conflict in Gaza, and warned that it would attack US warships if the militia group itself was targeted.

Houthi militants fired two anti-ship ballistic missiles into the southern Red Sea, though no damage was reported, the US Central Command said late on Tuesday.

Still, the average rate fetched for the three-year bond was slightly lower than the secondary market level amid expectations that the US Federal Reserve will cut rates as early as March, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort noted in a Viber message.

The US central bank last month kept the fed funds rate unchanged at 5.25-5.5% for the third straight time after it hiked borrowing costs by 525 bps from March 2022 to July 2023.

Mr. Ricafort added that the lower average rate came as the market expects slower inflation in December.

A BusinessWorld poll last week yielded a median estimate of 4% for December headline inflation, within the central bank’s 3.6-4.4% forecast and slower than the 4.1% in November and the 8.1% in December 2022.

If realized, December would be the first time that inflation was within the central bank’s 2-4% target and the slowest since the 3% print in February 2022.

This would bring the 2023 inflation average to 6%, matching the Bangko Sentral ng Pilipinas’ baseline forecast.

The Philippine Statistics Authority will release December consumer price index data on Friday.

The BTr wants to raise P195 billion from the domestic market this month, or P75 billion via Treasury bills and P120 billion through T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 5.1% of gross domestic product this year. — A.M.C. Sy with Reuters

The Bistro Group to expand in 2024

THE YEAR 2023 saw significant growth for The Bistro Group, which ended the year with 23 concepts and over 180 stores nationwide. It opened multiple stores in major malls and free-standing venues in Metro Manila and in Clark, Pampanga and Bacolod City.

This year will see the entry of new local and international brands.

Opening in Q1 2024 is Morton’s Steakhouse. Founded in Chicago in 1978, USD prime-aged steaks forms part of its core menu, along with fresh seafood, hand-picked produce, appetizers and desserts.

Also launching in Q1 2024 is Fogo de Chão, an internationally renowned restaurant founded in Southern Brazil in 1979. It focuses on the technique of churrasco — roasting high-quality cuts of meat over an open flame. The Bistro Group joins Fogo’s existing international franchise partners in Mexico and the Middle East.

There are also several homegrown restaurant concepts planned for expansion or launching this year, from Filipino, Chinese, Western to Mediterranean cuisines.

The food hall My South Hall at Conrad S’Maison will have a brand refresh with the introduction of new counters including Sarap+ Bistro Filipino, Fratboys & Sons (burgers, wings and salads), Xi Nen Hotpot, and the return of WCKD Milk Tea.

Also in the offing are the launch of Chinese restaurant/bar Red Lotus by Modern Shang and a new Mediterranean brand by Spanish chef Alfredo Rodriguez of Bistronomia.

This year will also see the opening of more branches of existing restaurant concepts.

PhilPaSS Plus transactions climb to P129 trillion in Q3

TRANSACTIONS done through the Philippine Payment and Settlement System (PhilPaSS) Plus reached P129 trillion in the third quarter of 2023 amid the increase in settlements between financial institutions.

This was 0.5% higher than the P128.32 trillion in the same quarter in 2022, the Bangko Sentral ng Pilipinas (BSP) said in its report on economic and financial developments in the third quarter of 2023.

PhilPaSS Plus is a real-time gross settlement system that processes and settles high-value transactions between banks through the demand deposit accounts of the lenders maintained with the BSP. The growing number of settlements by financial institutions prompted the BSP to upgrade the PhilPaSS system to PhilPaSS Plus on July 26, 2020.

Meanwhile, the total volume of transactions settled and processed by PhilPaSS Plus climbed 3.22% to 374,986 in the third quarter from the 363,277 seen a year prior.

This, as transactions made through financial market infrastructures (FMIs) and clearing switch operators (CSOs) grew by 10.1% year on year, and transactions between financial institutions (FIs) rose 8.4% annually.

“The increase in FMI and CSO transactions was due mainly to the growth in Delivery vs Payment (DvP)/National Registry of Scripless Securities (NROSS) and automated clearing houses (ACHs) transactions, which expanded year on year by 41% and 8.3%, respectively,” the BSP said.

The central bank said the growth in DvP/NROSS transactions came amid increased transactions in the government securities market as players preferred safer assets due to uncertainties in domestic and external markets.

“Moreover, the increase in ACHs transactions (i.e., transactions done via PESONet and InstaPay) can be attributed to the BSP’s continued efforts in digitalizing retail payments through the launching of Paleng-QR Ph Plus,” it said.

The growth in PESONet and InstaPay transactions can also be attributed to the waiver of transfer fee charges by some banks for transfers of P1,000 and below during the quarter, the BSP said.

“During the third quarter, payments among individuals, corporates, and government accounted for 38.6% of the volume of transactions at the PhilPaSS Plus, followed by transactions made through FMIs and CSOs at 33.8%, and transfers among FIs at 16.3%. The remaining 11.3% came from transactions with BSP units, government collections and payments, and intra-account transfers,” the central bank added.

“In terms of value, transactions with BSP units (68.4%), FMIs and CSOs (18.3%), and payments among individuals, corporations, and government (6.2%) made up about 92.8% of the total value of transactions,” it said.

Meanwhile, the volume of retail transactions — or customer payments to government, businesses, and individuals — stood at 184,240 in the third quarter, down by 0.5% year on year.

On the other hand, transactions via ACHs grew by 8.3% annually.

“The year-on-year growth in ACHs transactions may be attributed to the BSP’s initiatives in promoting digital retail payments across the country, which include among others Paleng-QR, Bills Pay PH, and QR Ph,” the central bank said.

“While there was lesser volume of retail transactions recorded in third quarter of 2023, the total value of transactions in these categories increased to P13.3 trillion, higher by 4.8% year on year,” it added. — K.B. Ta-asan

House of Investments unit buys Tarlac property for P2.7B

A UNIT of Yuchengco-led House of Investments (HI) has bought a 184-hectare property in Tarlac province in northern Philippines as part of efforts to improve its property portfolio and diversify revenue sources.   

In a regulatory filing on Wednesday, the company said Tarlac Terra Ventures, Inc., on Dec. 29 bought land from Rizal Commercial Banking Corp. (RCBC) for P2.7 billion. The lot is at the Central Techno Park in Luisita Industrial Park.

House of Investments said the property was bought through a deed of conditional sale. It added that Tarlac Terra Ventures has three years to pay for the lot.

The listed firm said the transaction allows Tarlac Terra Ventures to “own an asset that appreciates over time.”

“The property is located in a prime area in Tarlac that has potential for value appreciation,” it said. “The prospect of the property for future development is viewed to provide future revenues for HI.”

House of Investments’ core businesses are in car dealership, construction, education, and property management services. It also has portfolio investments in pharmaceuticals, energy, and death care.   

House of Investments shares rose by 7.03% or 23 centavos to close at P3.50 each. — Revin Mikhael D. Ochave

Not yet scrapped

FREEPIK

FOOD WASTAGE has become an environmental issue. The numbers are staggering. About one-third of food production for human consumption is scrapped. In 2022, this amounted to a worldwide waste of 1.3 billion tons of uneaten food worth $1 trillion. Compare this to Philippines’ 2022 GDP of $404 billion. The waste is even more staggering in the face of hunger in the world.

We’re not sure though how leftovers are calculated. Is the “trashed” food from a fast-food chain counted as waste, even when some collector picks it up to be eaten, or even resold?

What about “reconstituted” leftovers that are not really scrapped? The mantra of conservationists to “reuse, reduce, recycle” should also apply to food, not just toothbrushes. As a post-holiday reflection on food waste (as well as expanded waistlines), we should be mindful of our cultural definition of leftovers.

Local cuisine is hospitable to rescuing uneaten portions for further delight. Is this a function of economic status where the idea of wasted food seems obscene? Or maybe it’s just culinary creativity.

Certain recipes specify leftovers as main ingredients like the lechon paksiw (roast pig scraps stewed in vinegar). For this dish, only a leftover version exists as one cannot go straight to the saucy concoction without going through the roasted stage first. Even the inferior lechon with a chewy and tough skin achieves redemption in its recycled state. And this even has two versions using plain vinegar or the former sauce for marination.

Holiday leftovers, which by today can more properly be described as “remains,” challenge the homemaker. What does she do with all leftovers from guests who did not show up, perishable gifts, and assorted meals from Christmas Past (a culinary version of Uncle Scrooge’s ghosts)?

While clothes can be consigned to garage sales or businesses specializing in “previously owned” attire, perishable stuff like food can only be given away before their “best before” date. Aside from the usual second versions of a particular viand, here are some tips from someone who prefers to be considered an authority on behavioral economics rather than housekeeping mentorship.

Put leftovers in different containers with expiry dates. This categorizes the leftovers by their shelf life, the last day of which is defined as when the meat starts to host a colony of microbes and give off a distinct smell. Clearly, the longer lasting leftovers (like ham and cheese) can be consumed later, maybe at Easter.

Give it away. Forwarding food like text messages and fake news that one has received is considered recycling. Leftovers do not fall in this category, and the farther away from freshness and the Version 1 state, the more difficult it is to give away food. Especially to one who knows your home address. The key factor in this donation is edibility. The older food is in terms of carbon dating, the more embarrassing it is for the donor to unload it to anyone. (Yes, even garbage collectors have their standards.)

The tale of the wandering fruitcake is instructive. Because of the alcoholic content, this gift is often recycled (pay it forward) more than once and beyond one calendar year. There must be a “fruit cake” day declared where one is obliged to keep and eat the already moldy remains and declare it at the end of its earthly journey.

Leftovers are not limited to food.

If consumption rises at an unusually high rate during the holiday season, clearly a lot of it goes beyond normal use. How many of those umbrellas, stationery, and candy trays can be used by the gift recipient? He must give them away too. The desk diary is a special case. It seems to have dropped o- the corporate giveaway list. One must buy it at a bookstore since phones seem to have replaced the appointment book that records passwords, phone numbers, birthdays, and lunch dates.

Cash as a received gift is an exception. There is no leftover or recycling challenge involved, only ethical problems depending on the source. And is there really a problem of expiry dates and getting too much of it? (Where’s the nearest laundry?)

Still, the best leftovers deal with the immaterial. Warm memories of reunions and friendships are never scrapped. Photos of holiday celebrations are posted and reposted. And they never age… until compared to previous years’ posts.

 

Tony Samson is chairman and CEO of TOUCH xda

ar.samson@yahoo.com

Transforming PHL banking through data democratization

DATA democratization is like providing all team members in a basketball game with the same coach’s playbook. Limiting access to only select players hinders the team’s ability to execute cohesive plays and make effective decisions on the field. However, when the entire team has access to the playbook, they can understand the game plan, anticipate moves, and work together seamlessly to score more points and win the game. In banking, democratizing data empowers every employee to have a deep understanding of the business strategies and trends, leading to better collaboration and improved outcomes for the organization as a whole.

THE ROLE OF DATA IN THE PHILIPPINE BANKING SYSTEM
Today, financial institutions must possess the capability to amass, comprehend, and exploit data effectively to secure a competitive edge and achieve success. The same holds for local banks where, as Mc-Kinsey highlights, the combined value generated by the three major fintech and digital banks in the Philippines surpassed that of all traditional banks in the country over the past two years.

For the latter to thrive, they must acquire, comprehend, and capitalize on data swiftly. According to a report by IDC, organizations with a high degree of data intelligence experience a 40% financial improvement, and a 20% enhancement to operations compared with those grappling with a lower level of data intelligence.

Nevertheless, analyzing and acting upon organizational data has usually been confined to specific groups of employees within businesses for an extended period. This, in turn, has impeded decision-making and even led to decisions being made without robust data to substantiate them, placing organizations at a disadvantage.

REALIZING THE FULL POTENTIAL OF DATA
Want to know why democratizing data enables organizations to pivot towards data-driven practices? It’s because it allows employees of all stripes to access the data they need readily, empowering them to act on insights and with greater efficacy. For instance, this can be leveraged for customized and personalized customer experiences, ultimately leading to heightened levels of customer satisfaction and loyalty.

By embracing data democratization, banks arm their employees with highly available, reliable, and secure data. Not only does this enable processes to be streamlined and bottlenecks to be overcome, it also ensures data can be used to identify and comprehend emerging market and behavioral trends.

DATA DEMOCRATIZATION IN A PREDOMINANTLY HYBRID LANDSCAPE
The era where an organization’s data resided solely in a singular location is long gone. In today’s landscape, both business and technical users must possess the ability to fully harness data that spans diverse infrastructures, including cloud, distributed systems, and mainframes. When assessing data intelligence tools, organizations should prioritize solutions that not only enable data democratization within the business but also seamlessly integrate across diverse IT systems.

This need becomes increasingly critical as a growing number of organizations adopts hybrid solutions to leverage the advantages offered by both the cloud and the mainframe. In a recent survey conducted by Rocket Software, a staggering 93% of respondents strongly felt that their organizations should embrace a hybrid infrastructure model that encompasses both the mainframe and the cloud.

BENEFITS TO USERS ACROSS THE ORGANIZATION
Different roles have different goals. Therefore, data intelligence tools must provide benefits to users across the entire organization and be user-friendly enough for employees with varying backgrounds to leverage. This requires an intuitive interface and clear visualizations.

Tools with intuitive interface and clear visualization allow users to quickly and comprehensively identify critical data, regardless of their level of expertise in data science. It also allows users to create robust plans for change, such as updating data flows and managing cloud migration, ensuring that data management is efficient and effective.

This enables business users to gain a comprehensive view of the organization’s data landscape and understand the trustworthiness of the data. Data teams can focus on delivering exceptional value, IT can plan for IT modernization initiatives more effectively, and lines of business can execute business reporting more efficiently.

 

Praveen Kumar is the vice-president for Asia Pacific at Rocket Software.

National Government outstanding debt

THE NATIONAL Government’s (NG) total outstanding debt hit a fresh high of P14.51 trillion as of end-November, the Bureau of the Treasury (BTr) said on Wednesday. Read the full story.

 

National Government outstanding debt

You can’t reverse the ageing process but these 5 things can help you live longer

AT THIS time of year many of us resolve to prioritize our health. So, it is no surprise there’s a roaring trade of products purporting to guarantee you live longer, be healthier and look more youthful.

While an estimated 25% of longevity is determined by our genes, the rest is determined by what we do, day to day.

There are no quick fixes or short cuts to living longer and healthier lives, but the science is clear on the key principles. Here are five things you can do to extend your lifespan and improve your health.

1. Eat a predominantly plant-based diet

What you eat has a huge impact on your health. The evidence overwhelmingly shows eating a diet high in plant-based foods is associated with health and longevity.

If you eat more plant-based foods and less meat, processed foods, sugar, and salt, you reduce your risk of a range of illnesses that shorten our lives, including heart disease and cancer.

Plant-based foods are rich in nutrients, phytochemicals, antioxidants, and fiber. They’re also anti-inflammatory. All of this protects against damage to our cells as we age, which helps prevent disease.

No particular diet is right for everyone but one of the most studied and healthiest is the Mediterranean diet. It’s based on the eating patterns of people who live in countries around the Mediterranean Sea and emphases vegetables, fruits, wholegrains, legumes, nuts and seeds, fish and seafood, and olive oil.

2. Aim for a healthy weight

Another important way you can be healthier is to try and achieve a healthy weight, as obesity increases the risk of a number of health problems that shorten our lives.

Obesity puts strain on all of our body systems and has a whole myriad of physiological effects including causing inflammation and hormonal disturbances. These increase your chances of a number of diseases, including heart disease, stroke, high blood pressure, diabetes and a number of cancers.

In addition to affecting us physically, obesity is also associated with poorer psychological health. It’s linked to depression, low self-esteem, and stress.

One of the biggest challenges we face in the developed world is that we live in an environment that promotes obesity. The ubiquitous marketing and the easy availability of high-calorie foods our bodies are hard-wired to crave mean it’s easy to consume too many calories.

3. Exercise regularly

We all know that exercise is good for us — the most common resolution we make this time of year is to do more exercise and to get fitter. Regular exercise protects against chronic illness, lowers your stress, and improves your mental health.

While one of the ways exercising helps you is by supporting you to control your weight and lowering your body fat levels, the effects are broader and include improving your glucose (blood sugar) use, lowering your blood pressure, reducing inflammation, and improving blood flow and heart function.

While it’s easy to get caught up in all of the hype about different exercise strategies, the evidence suggests that any way you can include physical activity in your day has health benefits. You don’t have to run marathons or go to the gym for hours every day. Build movement into your day in any way that you can and do things that you enjoy.

4. Don’t smoke

If you want to be healthier and live longer then don’t smoke or vape.

Smoking cigarettes affects almost every organ in the body and is associated with both a shorter and lower quality of life. There is no safe level of smoking — every cigarette increases your chances of developing a range of cancers, heart disease, and diabetes.

Even if you have been smoking for years, by giving up smoking at any age you can experience health benefits almost immediately, and you can reverse many of the harmful effects of smoking.

If you’re thinking of switching to vapes as a healthy long-term option, think again. The long-term health effects of vaping are not fully understood and they come with their own health risks.

5. Prioritize social connection

When we talk about living healthier and longer, we tend to focus on what we do to our physical bodies. But one of the most important discoveries over the past decade has been the recognition of the importance of spiritual and psychological health.

People who are lonely and socially isolated have a much higher risk of dying early and are more likely to suffer from heart disease, stroke, dementia, as well as anxiety and depression.

Although we don’t fully understand the mechanisms, it’s likely due to both behavioral and biological factors. While people who are more socially connected are more likely to engage in healthy behaviors, there also seems to be a more direct physiological effect of loneliness on the body.

So if you want to be healthier and live longer, build and maintain your connections to others.

Hassan Vally is an associate professor in Epidemiology at Deakin University.

How PSEi member stocks performed — January 3, 2024

Here’s a quick glance at how PSEi stocks fared on Wednesday, January 3, 2024.


Peso rises ahead of Fed minutes

BW FILE PHOTO

THE PESO appreciated against the dollar on Wednesday on dovish expectations from the minutes of the US Federal Reserve’s December meeting to be released overnight.

The local unit closed at P55.57 per dollar on Wednesday, strengthening by 10 centavos from the P55.67 finish on Tuesday, based on Bankers Association of the Philippines data.

The peso opened Wednesday’s session weaker at P55.70 against the dollar. Its intraday best was its close of P55.57, while its worst showing was at P55.815 versus the greenback.

Dollars exchanged rose to $1.88 billion on Wednesday from $1.26 billion on Tuesday.

“The peso appreciated amid dovish expectations prior to the release of Fed minutes overnight,” a trader said in an e-mail.

Fed officials in December predicted 75 basis points (bps) of rate cuts in 2024, driving money market bets for around double that amount of cuts that prompted a cross-market year-end rally, Reuters reported.

Futures markets still see a 70% chance of the Fed starting to lower US borrowing costs from their current 22-year high from March.

The US central bank last month kept the fed funds rate unchanged at 5.25-5.5% for the third straight time after it hiked borrowing costs by a cumulative 525 basis points from March 2022 to July 2023.

The Federal Open Market Committee will hold its first policy meeting for the year on Jan. 25-26.

Dovish Fed bets caused the dollar to drop slightly on Wednesday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The dollar eased slightly on Wednesday though it stayed near a two-week high, underpinned by a confluence of factors including elevated US Treasury yields and a cautious turn in risk sentiment that weighed on Wall Street, Reuters reported.

Trading was thinned in Asia with Japan out on a holiday, with the greenback paring some of the morning gains over the course of the trading day in the region.

Still, against a basket of currencies, the greenback stood not too far from a two-week top of 102.25 hit on Tuesday, and was last at 102.13.

For Thursday, the trader said the peso could strengthen further as the market expects a slower Philippine inflation print for December. The data will be released on Friday.

The trader sees the peso moving between P55.40 and P55.65 per dollar on Thursday, while Mr. Ricafort expects it to range from P55.50 to P55.70. — AMCS with Reuters