HKD/PHP Outlook:
The outlook for HKD/PHP is slightly weaker, but likely to move sideways. The rate is currently below its 90-day average and near recent lows, reflecting a lack of clear support.
Key drivers:
• Rate gap: The Hong Kong Monetary Authority's recent interventions are aimed at supporting the HKD, while the Bangko Sentral ng Pilipinas has allowed market forces to primarily drive the PHP’s exchange rate.
• Risk/commodities: Oil prices remain relatively stable, which supports the HKD's performance amid lower expectations for PHP recovery.
• One macro factor: Heightened political risks in the Philippines related to corruption scandals have affected investor confidence and contributed to PHP weakness.
Range:
Expect HKD/PHP to drift within its recent 3.2% range, with little volatility anticipated.
What could change it:
• Upside risk: A significant improvement in the HKD's demand driven by capital inflows could provide support.
• Downside risk: Further deterioration in the Philippine political climate may lead to increased selling pressure on the PHP.
