SINGAPORE, SINGAPORE -- (Marketwire) -- 04/01/13 -- In his ASEAN Market Review for 29 March, leading global foreign exchange trainer, educator and author Mario Sant Singh whose views are widely sought after in the Forex industry, focuses on the use of macro-prudential tools to curb inflows to the Philippines:
Philippine Stock Exchange (PSE) surges to record high after sovereigns rise to investment grade
Fitch Ratings upgraded the Philippines' Foreign Current Issuer Default Rating (IDR) to 'BBB-' from 'BB+', an investment grade according to its ranking system. Besides that, the Long-Term Local Currency IDR has been upgraded to 'BBB' from 'BBB-'.
According to studies from Fitch, the Philippines' sovereign external balance sheet is considered relatively strong with a consistent current account surplus, mainly underpinned by remittance inflows. In my point of view, the U.S. Quantitative Easing (QE) program played a large part here.
Remittance inflows were worth 8% of Gross Domestic Product (GDP) last year and proved resilient, even through the unstable global crisis in the Euro Zone.
To view Figure 1, please visit the following link: http://www.askmariosingh.com/wp-content/uploads/2013/03/PSE-vs-MSCI-Asia.png
The PSE climbed to 463 last week after Fitch's upgrade. Its market is closed today for the Good Friday holiday, together with many other Asian countries.
To view Figure 2, please visit the following link: http://www.askmariosingh.com/wp-content/uploads/2013/03/PSE-vs-MSCI-Asia-2.png
Policy makers in the Philippines are set to act further prudently in their monetary policy; curbing inflow to prevent asset bubbles becomes more necessary now, as well as lowering the unemployment rate.
Since beginning of the year, Bangko Sentral ng Pilipinas (BSP) lowered the Special Deposit Accounts (SDA) rate twice to 3%, which is lower than its benchmark interest rate, and capped lenders' currency forward positions.
Moving forward, its central bank could provide investors easier access to the foreign exchange market by encouraging outflow, as well as curbing inflation. Consumer Price Index (CPI) surged to 3.4% YoY from the 2.8% in January, and the central bank targets the inflation band between 3-5% this year.
To view Figure 3, please visit the following link: http://www.askmariosingh.com/wp-content/uploads/2013/03/Phillipines-CPI-YoY.png
USDPHP - Coming support at 40.530
Given the possible further monetary policy implicated by the Philippine central bank, the Peso's upside might be capped. However, further risk could be continuous easing from western central banks, given that the global economy remains vulnerable, especially with the contagion from the Euro Zone.
From the technical analysis perspective, the USDPHP's coming support stands at around 40.530.
To view Figure 4, please visit the following link: http://www.askmariosingh.com/wp-content/uploads/2013/03/USDPHP-Chart.png
Market Review: ASEAN Market Review for 15 March 2013: ASEAN Equities Still Expected to Outperform
ABOUT MARIO SANT SINGH
Mario Singh is the Director of Training & Education at global retail Forex brokerage FXPRIMUS. He has ppeared as a guest expert on CNBC more than 35 times to talk about foreign exchange markets, and is a regular contributor to top investment publications and online portals. Known as a brilliant and intense communicator with a unique ability to 'keep Forex simple' and a mission to help every man-in-the-street to trade profitably and responsibly in the Forex market, more than 20,000 people have attended his Forex trading programs. He is the only Forex trader in Asia invited to train Julius Baer Private Bankers - the third largest Swiss Bank, and ICBC, China's largest commercial bank. Mario is also author of the best-selling book, 17 Proven Currency Trading Strategies: How to Profit in the Forex Market. (Wiley Publishing).
FXPRIMUS offers retail traders a level of trade execution, service quality and fund safety that are normally reserved only for the largest investors. Serving traders in 205 countries across 6 continents FXPRIMUS combines an unmatched level of fund safety with regular independent audits of company financials and Straight Through Processing, top notch execution with tight spreads, prompt and responsive customer support, ISO 27001 certification in Information Security and an industry-leading trader toolset that includes free access to powerful trader tools and personal coaching via FXPRIMUS Coach FXPRIMUS truly is The Safest Place To Trade.
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