In a statement sent to the press late Tuesday, Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said the central bank “continues to monitor the foreign exchange market but allows the market to function without aiming to protect a certain exchange rate.”
“Nonetheless, the BSP will participate in the market when necessary to smoothen excessive volatility and restore order during periods of stress,” he added.
On Wednesday morning, the peso started the trading session slightly stronger at P58.15 compared to the previous day’s close of P58.27. It’s weakest level as of 11:40 a.m. was at P58.235.
Remolona said yesterday’s peso weakness was “in line with other currencies in the region.”
“The dollar continued to strengthen as the Federal Reserve signaled delay in cutting interest rates,” he said.
In previous days, bankers opined that the bearish sentiment against the peso was due in part to signals from the central bank that it was ready to ease monetary policy by the second half of 2024. Lower interest rates help promote economic activity, but also tend to aggravate inflation.
Lower domestic interest rates causes fund managers to convert their assets out of pesos and into higher yielding currencies. This, in turn, erodes the value of the peso on the foreign exchange market.
Senior Reporter
