HALISTER1: Philippine Peso Drop Looks Excessive, Sell THB/PHP Forwards: ANZ

Philippine Peso Drop Looks Excessive, Sell THB/PHP Forwards: ANZ

(Bloomberg) -- Slide in Philippine peso over the past week looks excessive, Khoon Goh, head of Asia Research at ANZ, writes in note today.
  • Remittances and growth in business process outsourcing industry provide ongoing support for peso
    • Doesn’t expect divergence between USD/PHP and rest of USD/Asia to persist for too long
  • Recommends selling 3-mo. THB/PHP via forwards/NDF at 1.3828, targeting 1.3300 with stop-loss at 1.4050
  • Meanwhile, expects further weakness in Asian currencies
    • Strong inflows and yield-chasing behavior in the last few months appear to be driven more by expectations of large liquidity boosts by major central banks
    • With the market now questioning wisdom of this, bond yields have risen, leading to wobbles in equity markets
    • In turn, this is leading to increased volatility and Asian currency weakness
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Khoon Goh (Australia & New Zealand Banking Group Ltd)

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