Philippines: BSP keeps tight rein on forex rate – 27 Aug 2017

  • The Bangko Sentral ng Pilipinas (BSP) said the Philippines is not in a foreign exchange crisis even after the peso flirted with new 11-year lows.
  • Espenilla said the movement of the local currency is consistent in an investment and export-led strategy despite depreciating 2.5% y/y, making it the worst performing currency in the region in 2017.
  • The BSP chief said the daily movement of the peso is volatile as it is very sensitive to market price including economic fundamentals and external headwinds such as the tension between the US and North Korea.
  • “We remain confident that we are not talking about a free fall situation here. The fundamentals are very strong in terms of the macrofundamentals,” he said.
  • According to Espenilla, inflation is firmly under control as it is expected to fall within the midpoint of the 2-4% BSP target between 2017 and 2019. He said the country’s gross domestic product continues to grow robustly at 6.5% in 2Q17 from 6.4%.
  • The BSP chief also took note that the public sector deficit is under control while the gross international reserves remains very ample at USD80.79bn in end-Jul 17, enough to cover 8.6 months’ worth of imports of goods and payments of services and primary income.
  • Espenilla said the external debt position of the Philippines remains very low at only 24% of GDP from a peak of 60% in 2005. Espenilla earlier said the peso had sufficiently adjusted after depreciating gradually and warned speculators that authorities would deploy their full policy regulatory arsenal.

External Link :