BSP not worried about peso exchange value versus dollar

More from author

Pandemic fast-tracks race to financial inclusion–BSP

IN what appears to be a rare silver lining, the global pandemic has pushed more Filipinos to...

Economist says GDP likely hit 6.6% in Q4

THE local economy likely regained speed in the last quarter of 2019, a local economist said, as both government...

OFW remittances rise to $2.37 million in November

The Bangko Sentral ng Pilipinas (BSP) reported on Wednesday that overseas Filipino workers (OFWs) sent home some...

THE Bangko Sentral ng Pilipinas (BSP) is not worried about the recent movements of the peso against the US dollar, and expressed optimism for near-term relief for the local currency’s exchange value.

In a recent press briefing, Central Bank Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo told reporters markets may have somewhat “reconsidered” their negative sentiment toward the country that has caused them to be more risk averse in investing in the Philippines.

“We should not be bothered by the daily gyrations of the exchange rate. The exchange rate is driven by both fundamentals and sentiment. Fundamentals have not changed. It is the sentiment. And the sentiment happened to be negative in the last two weeks,” Guinigundo said.

“On that basis, it looks like the market has reconsidered; the stock market has rebounded very significantly; and the peso has recovered,” he said.

The local currency is still trading within the 48:$1 territory. At the end of this trading week, the peso hit 48.33 to a dollar, losing about 23 centavos of value from Thursday’s trade. The traded volume was at $779.35 million.

“These are market developments bound to change now and then, but the fundamentals have not changed. We continue to have one of the best fundamentals in the region, and that should not be lost among investors,” Guinigundo said.

While the country’s central monetary authority remains hopeful for the local currency’s value, a recent assessment from the private sector says otherwise.

In its monthly economic publication The Market Call, First Metro Investment Corp. and University of Asia and the Pacific said the local currency is seen to depreciate further toward the end of the year.

“We maintain that [the Philippine peso] will continue to be under pressure until the end of the year due to the consistent US economic recovery,” the economic publication said.

This, however, will not be all that bad for the economy, as a weaker peso could boost private consumption due to the effect it gives to cash remittances sent by Filipino migrant workers back home, especially during the holiday season.

“While the peso may further depreciate in the fourth quarter, this would provide an additional stimulus to the economy, as it gives additional purchasing power to overseas Filipino workers, exporters and related industries, and other domestic producers,” the Market Call read.

BSP Governor  Amando M. Tetangco Jr. earlier said they continue to allow market forces to dictate the movement of the local currency, hence, the recent weakness due to negative sentiment toward the country.

However, the governor has repeatedly said the BSP will remain vigilant and is ready to step in market operations should volatilities become “excessive” in their view.

Image credits: Wu Hong/Pool Photo via AP

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

More updates

Digitization not just for coping; embracing it is the way forward

THE only way to come out stronger out of this crisis is to embrace digitization and prevent...
- Advertisement -

Heavy use of loans for climate aid a ’scandal’—Oxfam

BRITAIN-BASED international nonprofit Oxfam said climate financing extended by developed countries is smaller than the declared amounts. In its Climate Finance Shadow Report 2020, Oxfam said the true value of support of developed countries for climate action may be as little as $19 billion to 22.5 billion per year...

DBCC may downgrade GDP outlook further

FINANCE Secretary Carlos G. Dominguez III said the Cabinet-level Development Budget Coordination Committee (DBCC) may once again revise its outlook on the Philippine economy to take into account the impact of the government’s decision to revert to a stricter lockdown in August after the number of infections rose with the easing of...

Northwest Palawan oil extraction by 2026–PNOC-EC

THE government expects to extract petroleum reserves within the northwest Palawan basin as early as 2026, a year before the Malampaya gas field runs dry. During the Senate budget hearing, Philippine National Oil Co.-Exploration Corp. (PNOC-EC) President Rozzano D. Briguez said drilling activities for Service Contract (SC) 57 would...

PHL has 4th worst pension of 39 economies–report

THE Philippines has the fourth worst pension among 39 economies in the world, and it has to improve the adequacy and integrity of its retirement income system, according to a report. In the Mercer CFA Institute Global Pension Index 2020, the country received a dismal 43 out of 100...
- Advertisement -

More updates

Heavy use of loans for climate aid a ’scandal’—Oxfam

BRITAIN-BASED international nonprofit Oxfam said climate financing extended by developed countries is smaller than the declared amounts.

In case you missed it