The current market bias for the HKD to PHP exchange rate is stable.
Key drivers include:
- Interest rates remain steady with Hong Kong’s authorities maintaining their policy rate, while the Philippines has recently cut rates, widening the interest rate differential.
- The Philippine peso has reached a new low against the dollar, influenced by economic challenges and potential future monetary easing in the Philippines.
- Inflation rates in both regions are projected to stay manageable, with the Philippine economy facing pressures that could affect growth.
In the near term, the exchange rate is expected to trade in a stable range, slightly above recent averages.
Upside risk factors include any unexpected recovery signals from the Philippine economy, improving investor sentiment, or effective governance measures. Downside risks may emerge from continued economic challenges facing the Philippines, alongside a potential unwinding of speculative trades affecting HKD fluctuations.