The peso fell to a new eight-year low against the greenback on Wednesday, but the central bank noted the local currency was tracking the global strength of the US dollar.
The Philippine currency slipped by 1 centavo to P49.86 to $1, its weakest in eight years since trading at P49.99:$1 on Nov. 20, 2008.
The central bank said it is still keeping the policy of allowing market forces to determine the exchange rate.
“This is global. Basically, the weakness in emerging market currencies is due to dollar strength. And why is that so? Because of the expectations that interest rates are going to rise in the US,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. told reporters on the sidelines of the Security Bank Economic Forum 2016 held in Makati City on Wednesday.
In line with the movements of other Asian currencies against the dollar, the peso is basically at mid-range of the depreciation since the beginning of the year, as well as in terms of volatility of exchange rate movements, he said.
“We are sticking to our current foreign exchange policy of allowing market forces to basically determine the exchange rate,” he added.
Tetangco noted monetary authorities do not want to see the exchange rate moving out of line, would like as little volatility as possible in exchange rate movements to avoid “disanchoring” expectations.
“We also look at how the other regional currencies are moving and compare that with how the peso peso is moving and what’s happening in the US dollar, what’s happening in the United States,” he said.