The Bangko Sentral ng Pilipinas (BSP) shrugged off concerns over the condition of the local currency amid its weakening versus the dollar and other regional currencies in recent days.
BSP Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo said that, while admittedly, the peso has seen volatility in the previous weeks, other sectors of the economy are actually benefiting from a weaker currency.
Guinigundo said the peso is being affected by negative market sentiment—a phenomenon seen across the region.
“People are speculating that the US dollar, because of the pending normalization in the US, will continue to strengthen versus regional currencies. We were affected by the herd mentality that [is] prevailing in the foreign-exchange markets today,” the deputy governor said.
The peso has traded near the 47-territory in the previous weeks after global developments erupted causing global markets to tumble.
On Thursday the peso traded at 46.73 to a dollar, weaker than the 46.705-to-a-dollar value seen in the previous day’s trade. The total traded volume, per the Philippine Dealing System, is at $518.8 million—slightly lower than the $565.986 million seen in the previous day.
“But because we have fundamental basis for stability, we always say that once the market is able to digest what is happening abroad and here in the Philippines, they should be able to think twice before leaving the Philippines,” Guinigundo said.
Specifically, Guinigundo cited resilient growth, manageable price environment, balance of payments surplus, the current-account surplus and general banking stability as among the “fundamental bases for stability.”
Guinigundo also said while a weak peso may be bad for the debt servicing of the government, as well as for importers of oil, raw materials and intermediate products, it will also be beneficial for the country’s exporters, business-process outsourcing receipts and the remittances of overseas Filipino workers.
The deputy governor also said the country’s foreign-exchange reserves will still be ample amid recent volatilities in the foreign-exchange market.