The Philippine peso's rally is set to reverse as seasonal selling flows weigh on the currency, strategists caution, pointing to historical patterns of outflows.
The article states that strategists see a season of selling ending the Philippine peso's rally, implying a reversal toward a weaker peso. This would push USD/PHP higher as the peso depreciates.
As the peso weakens, USD/PHP is expected to rise, potentially recovering recent losses. The magnitude will depend on the volume of outflows.
The article does not provide specific technical levels, but a reversal would target levels where USD/PHP was before the peso's rally.
Strategists are warning that the Philippine peso's recent rally is approaching its end as a seasonal tide of selling looms. Historical patterns show capital outflows during this period typically reverse prior gains in the currency. The peso's strength is seen as unsustainable, with a downturn expected as outflows pick up.
Seasonal factors, such as dividend repatriation and portfolio rebalancing, lead to capital outflows that historically weaken the peso, prompting strategists to forecast a reversal.
A weaker peso could increase import costs and add to inflationary pressures, but it may also boost export competitiveness.