The Philippine peso hit a more than three-week low on Friday after data showed annual inflation softened in July due to slower increases in food and utility costs.
The peso weakened 0.4 percent and was down 1.4 percent for the week. Equities in Manila shed 0.1 percent .
While inflation cooled for a sixth straight month, Bangko Sentral ng Pilipinas (BSP) said that upside risks from wage and transport fare hikes and bottlenecks in food supply remain.
Year-to-date inflation stood at 6.8 percent , above the central bank’s 2 percent -4 percent target for the year.
“In terms of monetary policy, we still think BSP’s hiking cycle is over and that it is on a prolonged pause,” analysts at Nomura said in a note.
“The bar for BSP to start its cutting cycle in the near term remains high, in our view, and will be carefully assessed by BSP with due consideration of the Fed outlook to avoid adding to FX pressures and the risk of capital outflows.”
The central bank, scheduled to meet next on Aug. 17, has kept interest rates steady at its last two meetings.
Other currencies in emerging Asia traded cautiously ahead of a crucial US jobs report due later in the day that may provide clues on the Federal Reserve’s monetary policy trajectory.
The monthly payrolls update may well offer both Asian equities and Asian FX a much-needed breather for consolidation, UOB analysts said in a note.
Malaysia’s ringgit and Indonesia’s rupiah rose 0.2 percent and 0.1 percent, respectively. The Singapore dollar traded flat.
South Korea’s won fell 0.8 percent , while the Thai baht depreciated 0.2 percent following an announcement on Thursday which detailed that a parliamentary vote for the next prime minister would be postponed.
China’s central bank will flexibly use policy tools to ensure reasonably ample liquidity in the banking system, an official said at a news conference, as investors looked for more signs of Beijing’s resolve to bolster a faltering economy.
The yuan eased 0.1 percent and stocks in Shanghai advanced 0.3 percent.
