The Bangko Sentral ng Pilipinas (BSP) said on Tuesday it would let the foreign exchange rate reflect market developments, but stressed it was ready to intervene in case of excessive volatility in the market.
“Right now, there are a lot of external factors that affect the currency. We’ve said volatility is there because of policy uncertainties, political tensions so it’s very difficult to say what’s affecting it on a daily basis,” Bangko Sentral Gov. Nestor Espenilla Jr. told reporters in a chance interview in Manila.
Espenilla insisted that the approach of the central bank was to let the exchange rate reflect underlying market conditions.
“We’ve seen nothing particularly unusual about this, it’s the nature of the exchange rate to fluctuate. As far as the
BSP is concerned, we’re there, we’re managing excessive volatility,” he said.
Espenilla said the BSP’s focus was to keep inflation low and the banking system strong.
“We are managing the economy that’s consistent with our economic fundamentals. What’s important is that the economy is growing very well, prices are stable, the financial system is safe,” he said.
The Philippine peso gained 16 centavos in Tuesday’s trade and closed at P50.53;$1, recovering from the near 11-year low of P50.69:$1 on Monday.
The peso opened at P50.75:$1 before trading between P50.53 and P50.87.
The peso first touched the P50:$1 level on November 24 last year, as bets on interest rate hikes in the US, which happened the following month, favored the dollar. The peso depreciated by 5.35 percent against the US dollar in 2016.