Bangko Sentral ng Pilipinas raised its policy rate by 25 basis points to 4.5% at the 23 April MPC meeting. It said further rises are possible as inflation forecasts are revised higher and second-round effects develop.
The Board flagged a higher risk of inflation expectations becoming de-anchored. It cited higher oil and fertiliser prices feeding into domestic fuel and food costs, while core inflation continues to edge up.
Governor Remolona said that once rate rises begin, another increase is likely, and that a 50bp move was discussed. The 25bp rise was described as measured, with the Board stating it would still accommodate economic recovery over the medium term.
The peso may find some support from the move, as it reduces the chance that policy lags inflation. The currency remains exposed to imported energy shocks and uncertainty around US–Iran ceasefire dynamics.
Technical levels cited were resistance at 60.83 and support at 60.15 (21 DMA) and 60, including 23.6% fibo retracement of the 2026 low to high. The article notes it was produced using an AI tool and reviewed by an editor.
We see the Bangko Sentral ng Pilipinas’ rate hike to 4.5% as a necessary step against rising inflation, which hit 5.1% in March. This move helps reduce the risk of the central bank falling behind the curve. For now, it provides some relative support for the peso.
However, the hawkish central bank is fighting a difficult battle against external pressures. With Brent crude futures trading near $105 a barrel due to ongoing US-Iran ceasefire uncertainties, the Philippines’ reliance on imports for over 90% of its oil needs puts severe pressure on the currency. This makes any strength in the Philippine Peso fragile.
We remember from our 2025 perspective how the peso weakened significantly during the energy price shock of 2022. That historical precedent suggests that geopolitical headlines can easily overpower domestic monetary policy. This makes us cautious about buying the peso outright despite the higher interest rates.
Given this tug-of-war, we are looking at options to manage risk over the next few weeks. Buying USD/PHP call options offers a way to profit if the peso weakens further towards that 60.83 resistance level. This strategy limits our downside if a sudden ceasefire deal strengthens the peso.
We are closely watching the 60.83 level in USD/PHP as a key resistance point and a potential target for long positions. On the other hand, a drop below the 60.15 support could signal that the BSP’s actions are gaining traction. Any break of these levels will likely guide our short-term derivative positioning.
