Published at 07:11 (GMT) 28 Oct

USDPHP

* 28 Oct 11: 07:11 GMT (SGA) - EMGA PHP FX FLOWS - USD/PHP supported; BSP hikes NDF risk-weight; 20% tax unlikely to deter

USD/PHP briefly rallied towards day highs of 42.650 on short-covering interests before retreating back into range. PSEI closed up 1.6%. Next chart target at 42.46 should hold intraday on repatriation flows. Meanwhile, the BSP raised the risk weight charge on NDF positions to 15% from the previous 10%, effective from Jan 2012. BSP had flagged a possible increase in the NDF risk weightages earlier in the year and is seen as a pre-emptive move to discourage undue speculation in the FX markets. This also provided a closure to speculation regarding the implementation timeline as noted in earlier reports and was lower than whispered 187.5% increase. Separately, Presidential spokesman Lacierda said the decision to impose a 20% tax on bonds due this month will likely not affect demand for the future public debt. He clarified that the recent court ruling in favour of the banks on the PEACe bond was 'the exception rather than the rule'. On the sides, onshore markets will be closed next Mon and Tue for All Saints Day. BA

* 28 Oct 11: 02:09 GMT (SGA) - EMGA PHP FX FLOWS - USD/PHP gaps down; BSP: Oct CPI 4.5-5.4%, to beef-up FX resv

USD/PHP extended yesterday's pull-back into Fri as EUR/USD bulls gained momentum o/n and stayed firm. Pair gapped down to 42.650 at open and slipped to sub-42.560 as risk uptake picked pace. Techs see 42.46 as the next downside target, with intraday upticks seen as a good selling opportunity. PSEi rallied +1.8% in early trade. Meanwhile, BSP Gov Tetangco said that CPI will likely be 4.5%-5.4% y/y in Oct from Sep's 4.8% and that this is a one-off 'surge' in price pressures. We expect Oct CPI to remain unchanged at 4.8% y/y. Separately, BSP Dep Gov Guinigundo said 'excessive' FX volatility remains a concern and confirmed the central bank's participation in the markets to contain PHP volatility. In addition, the BSP plans to continue building up international reserves to buffer against external shocks as well as streamline the process of registering FX for improved capital flows facilitation. The official added that capital controls will however be only deployed as a 'last resort'. On monetary policy, he said the policy tool aims to achieve financial and price stability while plans to amend FX rules are underway. The monetary authority may also consider easing banks' reserve requirement ratio (RRR) once economic growth picks pace and infrastructure spending accelerates. The current RRR is set at 21%. BA

* 28 Oct 11: 01:51 GMT - EMGA FX CHART USD/PHP Updates: Plunging like a falling-knife.

Sharp decline seen last session further boosted by opening gap-down below yesterday's low of 42.850 and heading towards next strong support at 42.225. Intraday rebound would be seen as good selling opportunity.

R5: 43.36 24 Oct high

R4: 43.27 * 27 Oct high

R3: 43.11 17 Oct low, break-point

R2: 42.85 27 Oct low

R1: 42.65 intraday level

S1: 42.46 9 Sep low

S2: 42.225 8 Sep low

S3: 42.18 5 Sep low

S4: 42.14 * 2 Sep low

S5: 41.90 ** 1 Aug low

* 27 Oct 11: 07:12 GMT (SGA) - EMGA PHP FX FLOWS - USD/PHP slips below 43.00; Fiscal sustainability; EU deal 'comprehensive

USD/PHP broke below key 43.00 level to reach a 6-week lows of 42.850 as EUR bulls gained more ground in afternoon trade. PSEi closed up 1%. Next support level at 42.79 is still some distance away and looks set to stay intact on profit-taking in EUR at day highs. Meanwhile, Finance Secy Purisima said the country is well-positioned to withstand potential global headwinds and also on track to fiscal sustainability, echoing Undersecy Beltran's comments yesterday. He added the country plans to tap public funds and ODA for infrastructure projects this year. The Jan-Sep budget deficit was PHP53bn and still way under the projected full-year deficit of PHP260.6bn. On the EU deal, Purisima commented that the deal should support market stability while BSP's Tetangco noted that confidence in the EU plans is critical for market normalisation, adding that the agreements were 'comprehensive.' BA

* 27 Oct 11: 02:27 GMT (SGA) - EMGA PHP FX FLOWS - USD/PHP breaks below 43.110; Higher NDF risk wt; Room for def. spendg

Early surge towards 43.275 highs lost momentum as EUR found support on positive comments on EFSF expansion plans. USD/PHP went south and tested below 43.110 strong support, to print 43.05 lows. PSEi was up 1% in early trades. Early optimism in Asian morning may fade on sketchy details in EU plan and this will likely see supported above 43.00 for this session. Meanwhile, the BSP plans to go ahead with a 187.5% market-risk weight on NDFs but stopped short of offering a specific timeline to implement the plan. This relates to earlier reports on increased risk weighting on NDFs. Separately, Gov Tetangco said Asia has room for deficit spending and for accommodative monetary policies to stimulate economic activity. We do not expect BSP to follow up with a rate cut as inflation remains a pipeline risk. The central bank kept rates steady in the last rate-setting meeting after raising 50bps during the recent rate hiking cycle. BA

* 27 Oct 11: 01:26 GMT - EMGA FX CHART USD/PHP Updates: Extending bounce from the strong 43.11 support.

Prices are still extending the bounce from 43.110 strong support and need to push higher to 43.360 hurdle to garner stronger upside momentum and targets the higher end of consolidation at 43.630. Below 43.110 support will see bears back on firm footing.

R5: 44.08 5 Oct high

R4: 43.78 6 Oct high

R3: 43.63 * 12 Oct high

R2: 43.49 21 Oct high

R1: 43.36 24 Oct high

S1: 43.13 25 Oct low

S2: 43.11 * 17 Oct low

S3: 43.05 14 Sep low

S4: 42.79 * 9 Aug high

S5: 42.71 13 Sep low

* 26 Oct 11: 06:50 GMT (SGA) - EMGA PHP FX FLOWS - USD/PHP range-bound; Govt to meet deficit goals; PHP9bn T-bond sold

USD/PHP was in consolidative mood on return from lunch, within 43.190-43.250 while PSEi closed down 0.4%. Meanwhile Finance Undersecy Gil Beltran said the country is in a good position to weather the global economic slowdown because of strengthened economic fundamentals under the Aquino govt. He is optimistic the govt would attain its deficit target of 3.5% in 2011 and 2.5% the next year (Inquirer). The budget shortfall for Q3 at PHP 36bn was less than half of projected PHP82bn for the same quarter. Separately, the treasury sold PHP9bn worth of 25-year T-bonds during yesterday's auction as investors chose to allocate their funds in safe facilities for a longer period. Elsewhere, the BSP reported that total banks' assets grew 10.7% as of end-Jul this year, as a result of strong growth in currency and deposits. BA

* 26 Oct 11: 06:39 GMT - EMGA FX CHART USD/PHP Updates: Intraday trade suspended above the 43.11 strong support.

Intraday trade suspended well from the 43.110 strong support and exposing risk of higher recovery to 43.360 ahead of 43.490. Bears will have to take out the 43.110 support to resume broader decline from 44.230 high.

R5: 44.08 5 Oct high

R4: 43.78 6 Oct high

R3: 43.63 * 12 Oct high

R2: 43.49 21 Oct high

R1: 43.36 24 Oct high

S1: 43.11 * 17 Oct low

S2: 43.05 14 Sep low

S3: 42.79 * 9 Aug high

S4: 42.71 13 Sep low

S5: 42.66 19 Aug high

* 26 Oct 11: 01:54 GMT (SGA) - EMGA PHP FX FLOWS - USD/PHP firmer; BSP policy aims to curb inflation and support growth

USD/PHP opened firmer at 43.190 and rose to 43.230 day highs amid thin market conditions and a modestly firmer dollar. Pair is expected to remain consolidative for this session ahead of tonight's EU Summit decision, with strong 43.110 support to stay intact. PSEi was down 0.3% in early trade. Meanwhile, BSP Gov Tetangco said the central bank's current monetary policy curbs inflation and supports growth, adding that inflation remained manageable and forecasted it to be lower in 2013 from 2011. On growth, he expected the robust remittances and domestic consumption to help the economy remain resilient, alongside the rest of Asia (BBG). After the stand-pat decision last Thurs, we do not expect BSP to follow up with a rate cut as inflation remains a pipeline risk. Though heightened risks to growth in light of weak external sector performance, as well as moderation in consumption and investment growth, may push the central bank towards a more accommodative stance, the pressure to do so should be limited given that they had only raised benchmark rate by 50bps during the past rate hike cycle. BA

* 26 Oct 11: 01:22 GMT - EMGA FX CHART USD/PHP Updates: Above 43.11 support, room for consolidation.

Starting the new day on a slightly firmer tone and this is indicating bears are reluctant to take out the more important support at 43.110, leaving room for intraday consolidation. Above 43.360 resistance will signal recovery strength towards 43.490.

R5: 44.08 5 Oct high

R4: 43.78 6 Oct high

R3: 43.63 * 12 Oct high

R2: 43.49 21 Oct high

R1: 43.36 24 Oct high

S1: 43.11 * 17 Oct low

S2: 43.05 14 Sep low

S3: 42.79 * 9 Aug high

S4: 42.71 13 Sep low

S5: 42.66 19 Aug high

* 25 Oct 11: 06:43 GMT (SGA) - EMGA PHP FX FLOWS - Sep budget deficit at PHP 18.5bn - data; USD/PHP range bound

Philippines posted PHP -18.5bn budget deficit in Sep as flagged by the Finance Secy Purisima earlier in the week and nearly half of programmed PHP 42.41bn deficit. This takes Jan-Sep shortfall to PHP 52.994bn and Q3's to PHP -36bn - far cry from programmed PHP 82bn for the quarter. With the two main agencies missing their Sep targets, it's not surprising to see a net deficit budget balance for the month. On the brighter side despite the small negative print on the headline, spending has picked pace in nominal terms, validating comments by key government officials that the government will cushion potential downside risks to growth via the fiscal route. Overall we see downside risks to the official revised PHP 260.6bn deficit projection for the year, with increasing likelihood that annual figure will be narrower than our estimate at -PHP 150bn. USD/PHP meanwhile was in consolidative mood on return from lunch, within 43.135-43.20 range. PSEi closed up 1.0%. RR

* 25 Oct 11: 05:01 GMT - EMGA FX CHART USD/PHP Updates: Retains downside pressure.

Intraday trade remains weak with prices still sinking towards the lower end of consolidation at 43.110 and need a sustained move below latter to resume the broader decline from 44.230 high. Strong resistance is keeping upside protected at 43.490 then 43.630.

R5: 44.08 5 Oct high

R4: 43.78 6 Oct high

R3: 43.63 * 12 Oct high

R2: 43.49 21 Oct high

R1: 43.36 24 Oct high

S1: 43.11 * 17 Oct low

S2: 43.05 14 Sep low

S3: 42.79 * 9 Aug high

S4: 42.71 13 Sep low

S5: 42.66 19 Aug high

* 25 Oct 11: 01:58 GMT (SGA) - EMGA PHP FX FLOWS - USD/PHP retreats; US extends duty-free perks; Small loans up

Softer dollar tone led USD/PHP to a weaker start at 43.180 on Tue from yesterday's close of 43.265. Pair slipped to 43.14 lows thereafter, prodded south also by USD/CNY record low fix. PSEi was up >1.0% in early trade. Improved market sentiments could see pair test immediate strong 43.110 support intraday, though choppy EUR will likely provide a floor at next support level at 43.050. Meanwhile, a number of local exporters will continue to enjoy duty-free privileges in the US market after Washington renewed its Generalised System of Preference (GSP) scheme (ABS-CBN). The US is the Philippines' second largest export market and bilateral trade between the countries amounted to USD13.9bn in 2010. Separately, BSP reported that bank loans to micro-enterprises reached PHP 7.3bn in Oct, a 22% rise from PHP 6bn in end-Dec last year. Gov Tetangco said that the improving financial standing of banks allowed them to lend to micro-enterprises which were perceived to be high-risk clients. Micro-enterprises comprise 90% of business entities in the country. On data just released, Philippines' import growth rose 10.4% y/y from 6.6% y/y in Jul, which saw its trade deficit widen to USD804m from USD570mn after previously released export growth contracted by a revised 13.6% in Aug vs Jul's -1.7% (For more details, search PHP+IMPORTS+TRADE). BA

* 25 Oct 11: 01:43 GMT (SGA) - EMGA PHP DATA NOW! Aug imports up 10.4% y/y, trade deficit widest in four-months

August imports rose 10.4% y/y picking pace from 6.6% the month before, resulting in a wider than expected trade deficit of USD 804mn (vs Jul's USD -570mn) - four-month high. Jan-Aug deficit now stands at USD 7.12bn, nearly three times of USD 2.5bn deficit in the comparable period last year.

Headline imports received support from unexpected quarters in August - after seven consecutive months of decline, capital goods imports rose 16% y/y, accounting for nearly 30% of overall inward purchases in the month. This could partly suggest that public and private investments could get off their feet in the months ahead. Alongside, steady purchases of raw materials/intermediate goods on expectations of seasonally-strong external demand were also noted, signaling that exports might shake off its recent weak run in Q4, though the buoyancy will be subdued compared to recent years, due to heightened external uncertainties.

Japan exports to Philippines picked pace slightly helped by diminishing supply-chain disruptions, with purchases from US also stepped up in the month. Overall we expect the external sector to find some support in Q4, though sluggish lead industry indicators and softening consumption in the Western markets will limit the extent of improvement. Notably, business group SEIPI also lowered its projections for shipments of electronics and semiconductors to -18% y/y for 2011, from -5.0% earlier. Further deterioration in the trade account position in Jan-Aug could narrow the current account surfeit. Marked currency weakness in September/October could also translate into firmer fuel import bill and weigh on the trade account. RR

* 25 Oct 11: 01:13 GMT - EMGA FX CHART USD/PHP Updates: Sinking towards 43.11 stronger support.

Retains downside pressure with prices sinking towards thelower end of consolidation at 43.110 and need a sustained move below latter to resume the broader decline from 44.230 high. Strong resistance is keeping upside protected at 43.490 then 43.630.

R5: 44.08 5 Oct high

R4: 43.78 6 Oct high

R3: 43.63 * 12 Oct high

R2: 43.49 21 Oct high

R1: 43.36 24 Oct high

S1: 43.11 * 17 Oct low

S2: 43.05 14 Sep low

S3: 42.79 * 9 Aug high

S4: 42.71 13 Sep low

S5: 42.66 19 Aug high

* 24 Oct 11: 07:33 GMT (SGA) - EMGA PHP FX FLOWS - USD/PHP slips; PHP6.3bn rail budget OK; Typhoon rehab to cost PHP 806mn

USD/PHP briefly weakened to 43.220 fresh day lows on EUR bounce, before recovering above 43.260 on short-covering interests. PSEi closed up 0.8%. Pair is expected to remain range-bound within 43.20-43.40 on position adjustments ahead of EU summit's decision this Wed. Meanwhile, President Aquino approved an additional PHP 6.3 bn budget to improve the rail system in the capital (ABS-CBN), as part of the PHP 72bn stimulus plan. Separately, govt agencies estimated the typhoon rehabilitation in central Luzon will cost PHP 806mn with repairs of damaged roads, bridges and school buildings expected to make up the bulk of the cost. BA

* 24 Oct 11: 05:55 GMT - EMGA FX CHART USD/PHP Updates: Intraday trade remains weak.

Intraday trade exposed crack on the downside with prices slipping below 43.300 support and now eyeing the lower end of broader 2-week consolidation at 43.110 and only below latter to revive decline from 44.230 high. Stronger end of consolidation seen protecting upside at 43.630.

R5: 44.08 5 Oct high

R4: 43.78 6 Oct high

R3: 43.63