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London kicks off Fashion Week, dedicated to late Vivienne Westwood

MODEL on the runway at the Bora Aksu fashion show during the Fall Winter 2023 Collections Fashion Show at London Fashion Week in London on Feb. 17. — JONAS GUSTAVSSON/SIPA USA VIA REUTERS
MODEL on the runway at the Bora Aksu fashion show during the Fall Winter 2023 Collections Fashion Show at London Fashion Week in London on Feb. 17. — JONAS GUSTAVSSON/SIPA USA VIA REUTERS

LONDON Fashion Week kicked off on Friday, with organizers dedicating the five-day event to late designer Vivienne Westwood, who died in December.

Ms. Westwood, who died aged 81, was one of British fashion’s biggest names. She rose to fame dressing the Sex Pistols, becoming synonymous with 1970s punk rock, and was known for her rebellious designs.

An avid campaigner, she used her runways to address issues she felt strongly about: climate change, pollution and her support for WikiLeaks founder Julian Assange.

“She is the embodiment of our extraordinary industry,” British Fashion Council (BFC) chair David Pemsel told London’s Evening Standard newspaper.

“It is only right and appropriate that we dedicate the entire week to her. We must celebrate her contribution as she was extraordinary and unique.” On Thursday celebrities and fashionistas gathered at London’s Southwark Cathedral for a memorial service for Ms. Westwood.

“She set such a high standard and she was fun to work with,” designer Paul Costelloe told Reuters at his Friday morning show. “London is empty because she is gone.”

Mr. Costelloe turned to James Joyce’s novel Ulysses for his collection featuring smart knitwear in browns, greys and greens as well as dresses adorned with floral prints in gold and pink hues.

The 77-year-old said the line reflected “the west coast of Ireland – very romantic, very soft, very rich in colors.”

London-based Turkish designer Bora Aksu opted for a mainly black and white line, inspired by Norwegian painter Edvard Munch and fictional character Wednesday Addams and which celebrated outcasts.

“They didn’t even try to fit into society, they didn’t try to change themselves,” Mr. Aksu told Reuters, adding the choice of black also took on a new meaning.

“With the recent… earthquake (in Turkey and Syria), black actually felt right in the sense of a silent grieving in a way. Even though it wasn’t my intention at the beginning it was easier to transform it into that kind of muted color palette.”

Mr. Aksu held a minute’s silence for the victims of the Feb. 6 earthquake that has killed more than 43,000 people.

His models wore black and white sheer dresses with bows, lace, frills and polka dots. There were crochet shawls and bonnets, trouser suits with trails. Dabs of color came in pastel blue and pink dresses with black trims.

Highlights this season include designer Daniel Lee’s debut at Burberry, while a BFC initiative with Ukraine Fashion Week will see three Ukrainian designers presenting their creations.

“Fashion needs to be continually evaluating what it’s giving back,” Natasha Bird, ELLE UK’s Executive Editor (Digital), told Reuters.

“Showcasing talent that might help the initiative of improving a country post-crisis or while enduring a crisis is a great way to kind of make sure that fashion has some worth and some value beyond just the business of making clothes.” — Reuters

Rates of Treasury bills, bonds may go up on tightening bets

BW FILE PHOTO

RATES of Treasury bills (T-bills) and Treasury bonds (T-bonds) on offer this week could rise to track yield movements at the secondary market and amid hawkish signals from officials of the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve.

The Bureau of the Treasury (BTr) will auction off P15 billion in T-bills on Monday, made up of P5 billion each in 91-, 182-, and 364-day papers.

On Tuesday, it will offer P35 billion in reissued 10-year Treasury bonds T-bonds that have a remaining life of nine years and six months.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that T-bill and T-bond rates may follow the rates seen at the secondary market.

“Upcoming Treasury bill auction yields could again be slightly higher, after the slight week-on-week increase in the comparable short-term PHP BVAL (Bloomberg Valuation Service) yields. The upcoming 10-year Treasury bond auction yields could be slightly higher at near the comparable 10-year PHP BVAL yield at 6.36% on Feb. 17,” Mr. Ricafort said.

He said PHP BVAL rates were higher after the BSP’s 50-basis-point (bp) rate hike last week and signals of more increases to come, as well as hawkish hints from officials of the US Federal Reserve.

At the secondary market on Friday, the 91-, 182-, and 364-day T-bills went up by 13.29 bps, 5.58 bps, and 2.31 bps week-on-week to end at 4.4768%, 4.9937%, and 5.3483%, respectively, based on the PHP BVAL Reference Rates data published on the Philippine Dealing System’s website.

The 10-year bond likewise climbed by 13.63 bps week on week to 6.3635%.

The BSP’s policy-setting Monetary Board last week on Thursday hiked benchmark rates by 50 bps for a second straight meeting, and hinted at further increases to help bring down elevated inflation.

The latest move brought the central bank’s policy rate to 6%, the highest in nearly 16 years or since May 2007 when it stood at 7.5%. It has now raised borrowing costs by 400 bps since May 2022.

BSP Governor Felipe M. Medalla last week said a third or maybe fourth rate hike is likely this year, adding they could look at a 25-bp or 50-bp increase at their March 23 meeting.

Meanwhile, Cleveland Fed President J. Loretta Mester and St. Louis Fed President James Bullard both said they would back a 50-bp hike in the next Federal Open Market Committee (FOMC) meeting following stronger-than-expected US consumer inflation data.

The US consumer price index (CPI) increased 0.5% last month after gaining 0.1% in December. In the 12 months through January, the CPI increased 6.4% following a 6.5% rise in December.

The Fed this month hiked its target interest rate by 25 bps to a 4.5%-4.75% range, bringing total increases since March 2022 to 450 bps. Its next policy review is on March 21-22.

“This week’s US data led by PCE (personal consumption expenditure) price indices and FOMC minutes may risk sustaining higher US Treasury rates and stronger dollar and thus, weigh further on risk sentiment,” Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a report.

“Higher bid-rates for the BTr’s reissuance of its FXTN (fixed-rate Treasury note) 10-69 (10-year) this week could sow the seeds of a steeper curve, although the early yield indication is in the range of 6.20%–6.30%,” Mr. Asuncion added.

Last week, the BTr raised P14.6 billion from its offering of T-bills, lower than the P15-billion program and even as bids reached P32.182 billion, as rates climbed across all tenors.

Broken down, the Treasury raised P5 billion as programmed via the 91-day T-bills, with tenders reaching P8.856 billion. The average rate of the three-month papers inched up by 4.4 bps to 4.23%, with accepted rates ranging from 4.15% to 4.313%.

The government also made a full P5-billion award of the 364-day securities as bids stood at P15.55 billion. The six-month tenor was quoted at an average rate of 5.298%, up by 0.6 bp, with accepted rates at 5.28% to 5.315%.

On the other hand, the BTr borrowed only P4.6 billion from the 182-day debt papers, below the P5-billion program, despite demand for the tenor reaching P7.776 billion. The average rate of the one-year T-bill went up by 8.2 bps to 4.949%. Accepted yields were from 4.91% to 4.975%.

Meanwhile, the reissued 10-year T-bonds to be auctioned off on Tuesday were last offered on Jan. 24, where the government raised the programmed P35 billion, with tenders reaching P93.696 billion. The issue fetched an average rate of 5.913%, with accepted rates at 5.749% to 5.99%.

The Treasury wants to raise P130 billion from the domestic market this month, or P60 billion via T-bills and P70 billion via T-bonds.

The government borrows from domestic and external sources to finance its budget deficit, which is capped at P1.47 trillion this year or 6.1% of gross domestic product. — A.M.C. Sy

DoF expects more businesses to go green this year

THE DEPARTMENT of Finance (DoF) is confident that it can persuade more businesses to go green this year, citing the possible passage of a bill easing tax payments as well as increased promotion of available incentives.

Finance Undersecretary Maria Cielo D. Magno said that despite the incentive packages, the Philippines still has a low count of environment-friendly companies.

“Companies are still applying; we still have very few,” she said in an interview on the sidelines of the Nordic-Philippine Climate Executive Dialogue on Thursday.

However, she expects to see progress this year since “we’re just at the beginning of implementing it,” referring to incentive packages provided by the fiscal incentives review board.

The DoF is giving incentives to companies that employ eco-friendliness and renewable energy, as well as those that introduce new technology.

“We are also working with Congress right now on the ease of paying taxes to simplify all the tax administration [and] tax payments,” Ms. Magno said, citing the inclusion of a provision that further simplifies invoicing requirements of companies.

She said the bill if passed would make it easier for export companies that are entitled to a value-added tax (VAT) refund to get their claim, benefits, and incentives given by the government.

Should the proposed bill be passed, it will remove the P500 annual taxpayer registration fee, introduce a medium-sized taxpayer classification, and remove the distinction between sales invoices and official receipts for purposes of recognizing VAT transactions.

“The [DoF] remains steadfast in mobilizing financing for climate change mitigation and adaptation,” Ms. Magno said.

The Finance department is currently establishing a sustainable finance ecosystem to synergize investments from the public and private sectors to yield green projects that “will have a lasting and permanent effect on the environment and our people,” she added.

Meanwhile, Ms. Magno said that in the extractive sector, which includes mining, and oil and gas exploration, “there is an active discussion within the MSG (multi-stakeholder group), the board of the EITI (Extractive Industries Transparency Initiative), to discuss stronger environmental and social monitoring,” noting awareness for the increasing need for critical minerals.

On its website, the EITI describes itself as a platform to show the direct and indirect contributions of the extractive sector to the economy, among others.

Critical minerals such as copper, lithium, nickel, cobalt and rare earth elements are essential components in rapidly growing clean energy technologies — from wind turbines and electricity networks to electric vehicles, according to the International Energy Agency.

Demand for these minerals will grow as clean energy transitions gather pace, it added.

“Right now, the group is working on a grievance mechanism, so that the MSG will be more accessible,” Ms. Magno said, adding the creation of more policies that target responsible mining.

“If we’re able to really implement policies that would make responsible mining feasible, then I think it’s good news for everyone, especially now that there’s increasing demand for critical minerals,” she said. — Alyssa Nicole O. Tan

Abandoning monocropping expected to boost farming households’ food security

PHILIPPINE STAR/EDD GUMBAN

By Patricia B. Mirasol, Reporter

IT’S DIFFICULT to imagine farmers being at risk of growing hungry, being so close to where the food is grown. But agricultural households that specialize too much in any one crop to maximize their land may find themselves in exactly that situation; avoiding such a predicament will require them to cultivate a variety of crops and farm animals.

“You can’t consume the same crop or food every day,” according to Ma. Elena P. van Tooren, executive director of the East-West Seed Foundation, Inc., adding that growing mixed crops also helps food security within a community because it makes food accessible, available, and affordable.

The East-West Seed Foundation is the corporate social responsibility arm of East-West Seed Philippines, which breeds and produces vegetable seed for tropical conditions.

“Grow local, consume local, shorten the food supply chain,” she said in an e-mail.

The Food and Agriculture Organization has said that one of the most advantageous features of home gardens is their “location adjacent to homes, close association with family activities, and a wide diversity of crop and livestock species to meet family needs.”

Per the World Food Programme (WFP), about a quarter of Philippine agricultural households are food insecure, compared to only 9% for non-agricultural households.

Regenerative agriculture — an approach that highlights intercropping, where multiple crops are planted together; agroforestry, the cultivation and use of trees and shrubs with crops and livestock in agricultural systems; and livestock integration — may likewise help contribute to food security.  

The approach helps both farmers and the environment by “ensuring that the agri-ecosystem remains productive, with less damage to the environment,” said academician Eufemio T. Rasco, Jr., chair of the Agricultural Sciences Division of the National Academy of Science and Technology.

“Switching from the present practice to regenerative agriculture practices may temporarily compromise food production, however, as it takes time to heal a damaged agro-ecosystem,” he said.

“This damage resulted from years of monoculture, harmful tillage practices, and chemical farming,” he told BusinessWorld.

Mr. Rasco added that the Philippines could be uniquely resistant to regenerative farming because of the “limited” diversity of its food — dominated by rice — and high meat consumption.

 “The existing practices in rice production is arguably the most environmentally destructive form of agriculture,” he said. “Meat has a higher environmental footprint than plants and fish. We need to shift to a more diverse diet, mostly plant-based.”

Ms. Van Tooren describes regenerative agriculture as “one level higher” than organic or natural farming, as it requires more planning.

“At this time, even natural or organic farming has limited adoption, with farmers claiming that commercial crop production is not possible with natural or organic methods and procedures,” she said.

Both organic or natural farming and regenerative agriculture require a paradigm shift, she added.

“We all know how difficult a paradigm shift can be. Pushing for organic or natural farming is paving the way towards regenerative agriculture,” Ms. Van Tooren said.

The global food and beverage manufacturer Nestlé, whose NESCAFÉ Plan helps smallholder Robusta coffee farmers increase yields and earnings, sees regenerative agriculture as feasible in the Philippines.

Project Coffee+, the Plan’s banner project, was implemented from 2018 to 2022 in the provinces of Bukidnon and Sultan Kudarat. A joint undertaking with the German development agency Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), the project sought to equip 1,500 farmer participants to approach farming as a “business beyond subsistence levels,” said Jose Uy III, senior vice-president and head of corporate affairs, Nestlé Philippines, Inc.

Some 83% of all coffee in the country is grown in Mindanao, Mr. Uy told BusinessWorld.

The Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) and Region XII (which covers the provinces of Cotabato, Sarangani, South Cotabato, and Sultan Kudarat in Mindanao) are two of the most food insecure regions in the country, WFP noted in October 2022. BARMM, in particular, is the only area that recorded food insecurity levels above 30%.

“These farmers have undergone extensive training to become agripreneurs who now practice farming as a business,” Mr. Uy said in an e-mail. As a result, he added, the participants’ average production grew to about 900 kg/hectare in 2021 from 235 kg/hectare in 2018.

The regenerative agriculture practices of composting, intercropping, agroforestry, and cultivating cover crops were among the techniques taught to the first batch of farmer participants. These, said Mr. Uy, strengthen resilience against climate change, increase harvests, help improve farm incomes, and promote coffee agriculture sustainability.

“As more farmers adopt these practices in and beyond coffee growing, the country’s agriculture sector as a whole can only become stronger, increasing our food security,” he added.

Gov’t debt yields rise on BSP move

YIELDS on government securities (GS) rose across the board last week as the Philippine central bank hiked key interest rates by 50 basis points (bps) to help stem elevated inflation.

GS yields, which move opposite to prices, went up by an average of 8.83 bps week on week, based on PHP Bloomberg Valuation Service Reference Rates as of Feb. 17, published on the Philippine Dealing System’s website.

Rates at the short end of the curve climbed, with the 91-, 182-, and 364-day Treasury bills (T-bills) going up by 13.29 bps, 5.58 bps, and 2.31 bps to 4.4768%, 4.9937%, and 5.3483%, respectively.

Likewise, the belly of the curve saw the biggest increases, with the rates of the two-, three-, four-, five-, and seven-year Treasury bonds (T-bonds) rising by 19.43 bps (to 5.5781%), 12.35 bps (5.7371%), 8.11 bps (5.8692%), 6.24 bps (5.9903%), and 8.70 bps (6.1851%), respectively.

At the long end of the curve, yields on the 10-, 20-, and 25-year debt papers gained 13.63 bps, 3.30 bps, and 4.15 bps to 6.3635%, 6.5725%, and 6.5772%, respectively.

Total GS volume traded reached P15.809 billion on Friday, higher than the P14.118 billion seen on Feb. 10.

ING Bank N.V. Manila Branch Senior Economist Nicholas Antonio T. Mapa said via e-mail that the increase in global bond yields helped drive local rates higher.

“Expectations that the Federal Reserve may need to hike their terminal rate after a string of better-than-expected US data was the main factor for this shift in sentiment. Onshore, the 50-bp increase and high inflation all played a part in pushing yields higher,” Mr. Mapa said.

He said the Bangko Sentral ng Pilipinas’ (BSP) rate hike last week was mostly anticipated by the market and showed its “resolve to bring inflation back within target.”

“This was viewed to be a positive for longer-dated bonds as inflation can be expected to head lower eventually with the help of this hike. We can expect more tightening from the Fed and the BSP should inflation remain elevated in the US and domestically. Bond markets may react initially, but if inflation eventually moderates, this could be viewed as a positive for the markets,” he added.

A bond trader also said in a Viber message that the market was mostly split prior to the BSP’s policy decision.

“Medium term, the key consideration will be how the January CPI (consumer price index) pushes the succeeding figures higher, especially in the near term. I think the BSP recognizes this as it revised its inflation forecast for 2023 significantly higher from 4.5% to 6.1%,” the bond trader said.

“This is bad news for the local GS market, with the prospect of a prolonged tightening cycle and a period of elevated yields,” the trader added.

The BSP’s policy-setting Monetary Board on Thursday raised benchmark interest rates by 50 bps for a second straight meeting after headline inflation surprised to the upside last month, indicating widening price pressures.

The latest increase brought the policy rate to 6%. The BSP has now hiked borrowing costs by 400 bps since May 2022.

Inflation climbed 8.7% year on year in January, faster than 8.1% in December 2022. It was the 10th consecutive month that it exceeded the central bank’s 2-4% target range for the year.

BSP Governor Felipe M. Medalla said after the meeting that it was difficult to rule out a third or a fourth increase this year, with a 25-bp or 50-bp hike likely to be delivered at their next review on March 23.

Meanwhile, mixed US consumer inflation data released last week supported worries over further rate increases by the Fed.

US consumer prices accelerated in January amid higher costs for rental housing and food. The US consumer price index increased 0.5% last month after gaining 0.1% in December.

In the 12 months through January, the CPI increased 6.4%. That was the smallest gain since October 2021 and followed a 6.5% rise in December.

The US central bank has raised its fed funds rate by 450 bps since March 2022 from near zero to a 4.5%-4.75% range, with the latest move being a 25-bp increase earlier this month.

Looking ahead, Mr. Mapa said yields may continue to rise as central banks here and abroad continue to tighten amid high, supply-driven inflation.

“The market will continue to take its cue from global developments, in particular on expectations of how hawkish the Fed would need to be in the coming months,” he added.

The bond trader expects the market to be defensive this week due to the continued rise in US Treasury yields and as the Bureau of the Treasury (BTr) resumes its weekly bond auctions.

The BTr canceled two T-bond auctions scheduled on Feb. 7 and 14 to make way for its retail Treasury bond offer that ended last week. — B.T.M. Gadon

CAMPI, TMA report 42% YoY sales leap in January

Toyota Motor Philippines, which once again leads the vehicle sales charge, is expecting “another milestone year,” said its President Atsuhiro Okamoto. — PHOTO BY KAP MACEDA AGUILA

VEHICLE SALES figures continue to trend upward, per the latest joint report of the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA). Last January, member companies of the two groups posted a consolidated sales total of 29,499 units — reflecting a 42.1% increase versus the 20,765 units recorded in the same month in 2022. Versus December, the market exhibited an expected seasonality dip from 37,259 units sold during that month.

CAMPI President Atty. Rommel Gutierrez said that the figure, coming off a “robust growth performance in 2022, is a good development momentum for the auto industry as we start the year.”

Leading the charge anew is Toyota Motor Philippines Corp. (TMP), with 13,428 units sold in January, helping the company corner 45.52% of the market. In second place is Mitsubishi Motors Philippines Corp. (MMPC), which moved 5,030 vehicles and accounted for 17.05% of total sales for the month. Ford Motor Company Philippines, Inc. sold 2,107 units in January — good for third place and 7.14% share of the market. In fourth is Nissan Philippines, Inc. (NPI) with 1,878 vehicles sold and 6.37% market share. Rounding out the top five is Honda Cars Philippines, Inc. (HCPI), with 1,639 vehicles sold and 5.56% market share.

During the recent media thanksgiving party held by Toyota, TMP President Atsuhiro Okamoto expressed, “We are humbled by the trust of our customers that resulted in a market share of 50% in 2022.” The executive expects 2023 to be “another milestone year” for the company, which is marking its 35th anniversary. “This year, we aim to step up our initiatives in providing mobility for all Filipinos. All indications are pointing to sustained economic growth driven by the increased movement of people and goods. As such, we are cautiously optimistic that the auto market will hit 388,000 units — 11% higher than 2022,” he continued.

Atty. Gutierrez affirmed in a release, “The auto industry is optimistic of its continued expansion from the demand-side standpoint driven by the growing domestic consumer market.” However, he cautioned that “supply-side challenges are also an important factor that the industry is mindful of as this may hamper the industry growth… the auto sales sustained growth or exceeded the last year’s record is not always clear-cut as our overall economic health and activity depends on various economic key indicators.” — Kap Maceda Aguila

Rappers Drake, 21 Savage settle with Conde Nast over fake Vogue cover

RAPPER Drake arrives on the red carpet for the film The Carter Effect at the Toronto International Film Festival (TIFF), in Toronto, Canada, Sept. 9, 2017. — REUTERS

DRAKE and 21 Savage have settled a lawsuit by Conde Nast accusing the rappers of using the Vogue name and creating a fake Vogue magazine without permission to promote their recent No. 1 album Her Loss.

In an internal memo on Thursday, Conde Nast general counsel Will Bowes said the settlement with the rappers includes an unspecified monetary payment that will “bolster our ongoing creative output, including Vogue editorial.”

He also said the settlement includes a permanent injunction against their commercial use of Vogue’s trademarks.

A lawyer for Drake had no immediate comment, while a lawyer for 21 Savage declined to comment. Reuters obtained Mr. Bowes’ memo.

Conde Nast, also known as Advance Magazine Publishers, Inc., had sought at least $4 million in its Nov. 7 lawsuit against the rappers.

The promotional campaign included a bogus Vogue cover featuring the pair, and a suggestion they had longtime Vogue editor-in-chief Anna Wintour’s “love and support.”

Conde Nast said the campaign was also directed to Drake’s and 21 Savage’s more than 135 million social media followers. A federal judge concluded on Nov. 9 that the campaign was causing confusion, and Conde Nast would likely succeed on its trademark infringement and false advertising claims. Drake, a Toronto native, and 21 Savage, from Atlanta, then voluntarily halted the campaign without conceding wrongdoing.

Mr. Bowes said in the memo that while Vogue’s name is often referenced elsewhere, “it was clear to us that Drake and 21 Savage leveraged Vogue’s reputation for their own commercial purposes and, in the process, confused audiences who trust Vogue as the authoritative voice on fashion and culture.” Her Loss was released on Nov. 4, and debuted at No. 1 on the Billboard 200 album chart. It ranks No. 8 for the week ending Feb. 18. — Reuters

Philippines lags behind peers in Global Knowledge Index

The Philippines ranked 77th out of 132 countries in the 2022 edition of Global Knowledge Index (GKI) by Knowledge 4 All (K4A) Foundation, a nonprofit organization and an advocate of artificial intelligence (AI) applications and open education. The index is a referential tool in supporting knowledge-based development and country-level performances in different knowledge sectors. The Philippines has a GKI score of 44.10 (out of 100 as highest possible score), below the world average of 46.47.

Philippines lags behind peers in Global Knowledge Index

How PSEi member stocks performed — February 17, 2023

Here’s a quick glance at how PSEi stocks fared on Friday, February 17, 2023.

Shares may drop as BSP hints at more rate hikes

PHILIPPINE STAR/KRIZ JOHN ROSALES

STOCKS are expected to move sideways with a downward bias this week due to expectations of more interest rate hikes from the Bangko Sentral ng Pilipinas (BSP) amid elevated inflation.

The benchmark Philippine Stock Exchange index (PSEi) declined by 36.89 points or 0.54% to close at 6,779.02 on Friday, while the broader all shares index dropped 17.39 points or 0.47% to end at 3,621.69.

Week on week, the PSEi lost 97.77 points or 1.42% from its close of 6,876.79 on Feb. 10.

“Stocks tumbled after the BSP painted a gloomy first-quarter outlook for monetary policy. The spike in January inflation prompted the BSP to raise their 2023 inflation projection to 6.1%,” AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message.

The BSP’s policy-setting Monetary Board on Thursday raised benchmark interest rates by 50 basis points (bps) for a second straight meeting, and signaled more tightening to tame inflation.

The central bank increased its policy rate to 6%, the highest in nearly 16 years or since May 2007 when it stood at 7.5%.

The BSP has now hiked borrowing costs by 400 bps since May 2022.

The central bank raised its average inflation forecast for 2023 to 6.1% from 4.5% previously. This is beyond the BSP’s 2-4% target range.

It also hiked its 2024 inflation projection to 3.1% from 2.8% previously.

BSP Governor Felipe M. Medalla said after the meeting that it was difficult to rule out a third or maybe a fourth increase this year, with a 25-bp or 50-bp hike at their next meeting on March 23 almost guaranteed.

For this week, Mr. Vistan said the BSP’s hawkish outlook could affect market sentiment.

“The BSP hinted that there is still work to be done as the local benchmark rate is among those that are negative in real terms. The market is expected to remain weak this week as the PSEi broke some key support levels,” he said.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco also said the PSEi may trade with a downward bias after the BSP signaled more rate hikes to come.

“[Overall], the market is still seen to move with a downward bias amid resurfacing worries over aggressively hawkish monetary policy outlooks of the BSP and Federal Reserve,” Mr. Tantiangco said in a Viber message.

China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail that the movement of offshore markets over the weekend could affect the PSEi on Monday.

“In case we see a sustained sell-off, then we are likely to track lower. Nevertheless, we think that there remain opportunities for bargain-hunting considering that we’ve already seen four weeks of decline,” Mr. Mercado said.

Mr. Vistan placed the PSEi’s support at 6,509 and resistance at 6,800, while online brokerage 2TradeAsia.com put support at 6,600-6,650 and resistance at 6,850 and Mr. Mercado pegged support at 6,600-6,640 and resistance at 6,950-7,000. — Ashley Erika O. Jose

Peso may climb amid hawkish policy signals

BW FILE PHOTO

THE PESO could strengthen against the dollar this week as the Philippine central bank’s chief hinted at more rate increases moving forward to help tame red-hot inflation.

The local unit closed at P55.24 per dollar on Friday, weakening by 12 centavos from its P55.12 finish on Thursday, data from the Bankers Association of the Philippines’ website showed.

Week on week, the peso dropped by 82 centavos from its P54.42 finish on Feb. 3.

The peso opened Friday’s session at P55.25 per dollar. Its weakest showing was at P55.335, while its intraday best was at P55.15 against the greenback.

Dollars exchanged fell to $878.3 million on Friday from $1.143 billion on Thursday.

The peso depreciated after hawkish signals from officials of the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The BSP on Thursday raised benchmark interest rates by 50 basis points (bps) for a second straight meeting, and signaled more tightening to come to tame inflation.

The central bank increased its policy rate to 6%, the highest in nearly 16 years or since May 2007 when it stood at 7.5%. It has now hiked borrowing costs by 400 bps since May 2022.

The BSP raised its average inflation forecast for 2023 to 6.1% from 4.5% previously. This is beyond the BSP’s 2-4% target range.

It also hiked its 2024 inflation projection to 3.1% from 2.8% previously.

BSP Governor Felipe M. Medalla said after the meeting that they could not rule out a third or fourth rate increase this year and could consider a 25-bp or 50-bp hike at their next review on March 23.

Meanwhile, Cleveland Fed President J. Loretta Mester and St. Louis Fed President James Bullard both supported a 50-bp hike in the next Federal Open Market Committee meeting following data showing sticky US inflation.

US consumer prices accelerated in January amid higher costs for rental housing and food. The US consumer price index (CPI) increased 0.5% last month after gaining 0.1% in December.

In the 12 months through January, the CPI increased 6.4% following a 6.5% rise in December.

The US central bank this month raised its target interest rate by 25 bps to a 4.5%-4.75% range, bringing cumulative hikes since March 2022 to 450 bps.

The Fed’s next policy review will be held on March 21-22.

For this week, Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a report that the BSP’s hawkish tone could support the peso against the dollar.

“Markets will have to contend with the BSP capable of being uber hawkish than the Fed, if demanded by local inflation risks… Following the BSP’s recent hawkish stance, the BSP’s higher inflation forecast will likely prompt more rate hikes in succeeding months to deter persistent inflation overshooting, and thus, uplift peso sentiment. In short, the BSP’s terminal policy rate cannot stay at 6% where the policy rate is now, which will be supportive of the peso,” Mr. Asuncion said.

The market will also wait for upcoming releases for leads, including the Philippine balance of payments report on Monday, Fed meeting minutes, as well as US data on employment, housing, and manufacturing, Mr. Ricafort added.

Mr. Ricafort expects the peso to trade between P55 and P55.50 per dollar this week, while Mr. Asuncion sees the local unit moving from P54.70 to P55.40. — A.M.C. Sy

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