Connect with us

Hi, what are you looking for?

News

PHL draws line in sand for peso as currencies reel

THE Philippines is defining the limit of its tolerance for peso weakness, as Asian central banks grapple with the mighty US dollar.

The peso slumped to a record low of P59 against the greenback in late September, but has held near that level ever since. Bangko Sentral ng Pilipinas (BSP) has repeatedly said it’s not defending a specific target, but analysts say authorities have drawn a line in the sand to prevent the peso from piercing the key psychological level of 60 per dollar.

Global central banks are starting to diverge in their approach to managing volatility in response to the unrelenting strength of the US dollar, with the Philippines now joining China and Japan in appearing to defend a particular level. Most other central banks are sticking with efforts to curb volatility, while some including Vietnam’s have signaled they’re willing to tolerate more currency weakness.

“Some central banks try to draw a line in the sand but in a strong dollar environment, foreign exchange intervention can only go so far and defending a particular level may be a fool’s errand,” said Eugenia Victorino, head of Asia strategy at Skandinaviska Enskilda Banken AB in Singapore. “I expect at least one more round of dollar strengthening. So Asian central banks must conserve their fire power.”

PESO DEFENSE
In the Philippines, the peso’s weakness has already drawn the attention of President Ferdinand R. Marcos, Jr., who said this week the nation is prepared to defend the currency.

“We intervene. We won’t tell you which days and at what rates,” BSP Governor Felipe M. Medalla told Bloomberg News in a mobile-phone message earlier this week.

Intervention can be costly. Asian nations spent about $50 billion of their foreign exchange reserves last month — the most since March 2020, according to Exante Data, Inc. Bangko Sentral has drained billions of dollars from the nation’s reserves, which have fallen more than 14% this year.

“The BSP does not normally react too much to movements in the exchange rate in keeping with our market-determined exchange rate policy,” Mr. Medalla said in a speech, a copy of which was posted on the BSP website on Thursday. “But the peso depreciation, while remaining in line with regional peers, has been adding to the buildup of inflationary pressures. This strengthened the case to act — and to act decisively.”

The peso will likely end the first quarter of 2023 at P59.2 per dollar, according to the median forecast in a Bloomberg survey.

“The trend of the peso remains tenuous with downside risks that could emanate from Federal Reserve hikes and dollar strength,” said Robert Dan J. Roces, chief economist at Security Bank Corp. in Manila. — Bloomberg

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

News

THE PESO strengthened against the dollar on Tuesday amid easing global oil prices and ahead of an expected increase in remittances due to the...

News

PHILIPPINE STOCKS extended their climb on Tuesday on last-minute bargain-hunting and ahead of the rebalancing of the MSCI. The bellwether Philippine Stock Exchange index...

News

The Government Service Insurance System headquarters in Pasay, Philippines. May 28, 2012. — BW FILE PHOTO THE government financial institutions (GFIs) that will be...

News

REUTERS THE European Chamber of Commerce of the Philippines (ECCP) urged the Philippines to eliminate tariffs on imports of all electric vehicles (EVs) regardless...

News

President Ferdinand Marcos Jr. answers questions from the media after his first Cabinet meeting in Malacañan Palace, July 5. — PHILIPPINE STAR/ KRIZ JOHN...

News

FREEPIK AN Israeli tech investor said a country’s legal system is a major consideration in attracting foreign investment, and urged legislators to reform the...

You May Also Like

News

BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...

News

REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...

News

KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...

News

COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...

Disclaimer: Respect Investment.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.