Business and Economy
BSP readies itself against forex instability
Bangko Sentral ng Pilipinas (Central Bank of the Philippines). Wikipedia photo
MANILA — The Bangko Sentral ng Pilipinas said yesterday that it is ready to act in case of instability following recent activities involving the renewed geopolitical risks.
“On the exchange rate, our policy remains the same — allow the foreign exchange rate to be fundamentally determined but we will not hesitate to be present in the market if the rate movements become excessively volatile/fast in one direction,” BSP Governor Amando M. Tetangco Jr. said.
He added, “We will continue to monitor developments in Syria/US policy and their impact on commodity prices to see how these translate into our domestic inflation dynamics, and assess if there is any need to make adjustments to policy.”
Last week, the US Senate backed up the plan of President Barack Obama to arm Syrian rebels to fight Islamic State militants. The plan is ready to be made into law once the US president signs it.
According to analysts, this move may increase volatility in both international financial and oil markets.
“Heightened geopolitical risks often result in flight to quality in financial markets — often, towards advanced economies and therefore possible depreciation pressures on the currencies in EMEs (emerging markets and economies),” said Tetangco. “These could also result, if related to major sources of oil/commodities, to volatility in the international prices of these commodities,” he added.
On Thursday, the peso declined to 44.42 from 44.36 last Wednesday afternoon. There was no trading last Friday given Tropical Storm Mario locked down Metro Manila because of heavy to intense rains.
Since the start of this year, the peso has averaged 44.28 per dollar.
“All these said, we reiterate that the country’s fundamentals remain sound and we have built buffers such as strong external liquidity position, sound banking sector, fiscal and monetary space, which should allow us to remain resilient in the face of these external risks,” said Tetangco.
