The Philippines is not experiencing a foreign exchange crisis despite the peso’s continued weakness, the chief of the Bangko Sentral ng Pilipinas (BSP) said on Friday.
“Definitely we are not in a foreign exchange crisis. We allowed the peso to adjust moderately and gradually but I can assure that the BSP is in full control of the exchange rate,” central bank Governor Nestor Espenilla Jr told a forum staged by the Economic Journalists Association of the Philippines.
The peso, Espenilla noted, has depreciated at a relatively moderate 2.5 percent since the start of the year.
“It’s gradual but it’s also consistent since the government is also pushing for investments and export-led economic growth, which is actually sustainable,” he said.
The moderate weakening is supportive of exporters, overseas workers, business process outsourcing, and tourism, Espenilla added.
At the same time, the depreciation is also helping dampen consumption.
“You know the economy today is growing fast but consumption is also a major part of the driver. So there is a need to rebalance it so they actually are riding on investments and exports growth. So this is all part of the adjustment process to promote sustainable economic development,” Espenilla explained.
“We remain confident that we are not talking about a free fall situation. The fundamentals are very strong in terms of the macrofundamentals,” he added.
The BSP chief also claimed that market nervousness was coming down given assurances made by monetary authorities.
“I think the results should speak for themselves on that point. So we’ve always said that while the peso is market-determined, the BSP is carefully monitoring developments and will take necessary actions when things go out of hand. We’re always watching the market,” he said.
The peso has fallen to near 11-year lows, trading in P51 to the dollar territory, due to factors such as the prospect of war on the Korean peninsula.
It lost 8 centavos on Friday to close at P51.08:$1. Several analysts have said that it could fall to the P52:$1 level before the end of the year.