Peso weakness ‘temporary’ — BSP official

The recent weakness of the Philippine peso is only temporary as the greenback is buoyed by developments overseas such as the stance of the Federal Reserve, a top official of the Bangko Sentral ng Pilipinas (BSP) said Monday.

Speaking in a panel at the Philippine Economic Briefing, BSP Senior Assistant Governor Iluminada Sicat said the central bank continues to monitor developments in the currency market, with the recent sessions impacted by the current position of the Federal Reserve.

“I think this is only temporary and eventually, once things clear up, it will be the fundamental that will determine the level of exchange rate,” she said in Pasay City.

The Philippine peso closed Monday at P58.11 to US$1, appreciating by 8 centavos from last Friday’s finish of P58.19:$1. It also hit an 18-month low of P58.27:$1 on May 21, 2024.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort attributed Monday’s appreciation to recent remarks made by the central bank, saying it was prepared to participate in the market when necessary.

“The US dollar/peso exchange rate corrected slightly lower… amid reiterated signals on possible intervention should there be excessive volatility and to bring greater order in the foreign exchange market,” he said in a mobile message.

For her part, Sicat said the central bank generally lets the market dictate the foreign exchange level, but it continues to monitor the market and stands ready to act.

“We do not target any specific exchange rate level. We just let the market determine the level of the exchange rate and what we look at when we enter into the market is that we look at whether there is presence of market stress,” Sicat said.

“If we let the market stress be left unattended, it would affect inflation expectations and that’s something we are avoiding. We look at market stress, we consider fundamentals, and we also look at what’s happening around the area — are we the only ones depreciating or not, given the fact that all of us are being affected by the current position of the Federal Reserve,” she added.—RF, GMA Integrated News