THE Bangko Sentral ng Pilipinas said on Wednesday that it is “very comfortable” with the local currency’s level and is not keen on making the BSP’s presence felt in the market, despite the outcry over rising import inflation due to the weaker value of the peso.
BSP Governor Nestor A. Espenilla Jr. said the recent movement of the peso—which has been generally on the uptrend for the rest of 2018— is just a “normalization” on the part of the local currency.
“Things are just normalizing. Right now, where we are at is very comfortable and the Philippines is competitive at its current level,” Espenilla said.
Data from the Bankers Association of the Philippines showed the local currency closed the day’s trade at P52.385 to a dollar on Wednesday with a total traded volume of $859.1 million.
This is already about P2 weaker than the P50.395 to a dollar average value of the peso at the end of 2017.
The fall of the peso’s value raised concerns among various sectors in the country, the latest being manufacturers complaining about rising costs due to higher imported inflation.
In the latest survey among manufacturers for the monthly Purchasing Managers Index (PMI), IHS Markit Principal excomomist Bernard Aw particularly cited the Philippine manufacturing sector, along with Indonesia’s, as the worst hit in import inflation due to their weaker currencies.
Transport groups have also raised concern over the prices of petroleum in recent months—as aggravated by the combination of a weaker currency, the newly imposed higher taxes and the international price spikes.
However, the BSP is not looking to meddle in the movement of the peso and is eager to keep the local currency’s rate against the greenback “market determined.” Part of the BSP’s mandate as the country’s central monetary authority is to participate in the trade of the market to smoothen out any excessive movements in the local currency.
Espenilla said, “…but we are generally letting the market decide on the exchange rate [that’s why the BSP is not intervening too much].”
While a weak currency causes concern among importers and sectors relying on imported goods, it bodes well for local consumption as it boosts the purchasing power of the dollars sent home by millions of Filipino migrant workers.