Peso fall not due to weakness but dollar strength: BSP chief | ABS-CBN
Welcome, Kapamilya! We use cookies to improve your browsing experience. Continuing to use this site means you agree to our use of cookies. Tell me more!
Peso fall not due to weakness but dollar strength: BSP chief
Peso fall not due to weakness but dollar strength: BSP chief
Photo illustration of US dollar to PH peso exchange in this photo taken on September 30, 2022. Gigie Cruz, ABS-CBN News
Photo illustration of US dollar to PH peso exchange in this photo taken on September 30, 2022. Gigie Cruz, ABS-CBN NewsMANILA (UPDATE) -- Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said the peso's recent depreciation does not mean that the local currency is performing poorly, but rather because the US currency has become stronger.
MANILA (UPDATE) -- Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said the peso's recent depreciation does not mean that the local currency is performing poorly, but rather because the US currency has become stronger.
After closing at a 17-month low of P57 to the US dollar on Tuesday, the peso slid further to P57. 18 on Wednesday.
The BSP chief partly attributed the peso's slide to geopolitical tensions and speculation over the US Federal Reserve's next steps.
The BSP chief partly attributed the peso's slide to geopolitical tensions and speculation over the US Federal Reserve's next steps.
“I wouldn’t say it is performing poorly. I would say it’s adjusting to some events initially weakened along with other emerging market currencies because of what’s going on in the Middle East,” Remolona said in a press conference on Wednesday.
“I wouldn’t say it is performing poorly. I would say it’s adjusting to some events initially weakened along with other emerging market currencies because of what’s going on in the Middle East,” Remolona said in a press conference on Wednesday.
The central bank chief added that the decline may have been a reaction to Fed Chairman Jerome Powell’s signal that rate cuts in the US may come later than expected.
The central bank chief added that the decline may have been a reaction to Fed Chairman Jerome Powell’s signal that rate cuts in the US may come later than expected.
ADVERTISEMENT
“I think it’s adjusting to Powell’s speech that maybe they won’t ease until September, or September is kinda how people interpreted what Powell said. So there’s a postponement of when the FOMC (Federal Open Market Committee) will ease in the eyes of the market. So that has meant weakening of other currencies against the US dollar,” Remolona said.
“I think it’s adjusting to Powell’s speech that maybe they won’t ease until September, or September is kinda how people interpreted what Powell said. So there’s a postponement of when the FOMC (Federal Open Market Committee) will ease in the eyes of the market. So that has meant weakening of other currencies against the US dollar,” Remolona said.
“So it’s not a case of a weak peso. It’s a case of a strong dollar,” he added.
“So it’s not a case of a weak peso. It’s a case of a strong dollar,” he added.
RATE CUT IN Q4 OR 2025
Remolona also does not see the weakening of the peso to be sharp enough to warrant adjusting interest rates.
Remolona also does not see the weakening of the peso to be sharp enough to warrant adjusting interest rates.
With inflation accelerating for two consecutive months, the BSP earlier said policy easing may not come soon as inflation risks continue to lean on the upside.
With inflation accelerating for two consecutive months, the BSP earlier said policy easing may not come soon as inflation risks continue to lean on the upside.
Remolona also said the adjustment of the peso has not been large enough to affect inflation expectations.
Remolona also said the adjustment of the peso has not been large enough to affect inflation expectations.
ADVERTISEMENT
The Monetary Board may also reconsider cutting rates this year.
The Monetary Board may also reconsider cutting rates this year.
“The central scenario will be fourth quarter. If things are worse, then we might postpone to first quarter of 2025,” Remolona said.
“The central scenario will be fourth quarter. If things are worse, then we might postpone to first quarter of 2025,” Remolona said.
BMI, a unit of Fitch Solutions, expects the Philippine peso to remain volatile in the short term due to the constant repricing of interest rate expectations in the US.
BMI, a unit of Fitch Solutions, expects the Philippine peso to remain volatile in the short term due to the constant repricing of interest rate expectations in the US.
Despite weakening by around 2 percent year-to-date, the peso has held up relatively well compared to its regional peers, BMI said.
Despite weakening by around 2 percent year-to-date, the peso has held up relatively well compared to its regional peers, BMI said.
The peso's volatility is expected to ease once the Fed implements its first rate cut in July, with the peso seen stabilizing at around P56.50 to the dollar.
The peso's volatility is expected to ease once the Fed implements its first rate cut in July, with the peso seen stabilizing at around P56.50 to the dollar.
ADVERTISEMENT
ADVERTISEMENT
