Philippines: BSP warns speculators as peso adjusts sufficiently – 22 Aug 2017

  • The Bangko Sentral ng Pilipinas said the peso has sufficiently adjusted after its gradual depreciation, warning speculators that the BSP is ready to deploy its full policy and regulatory arsenal to protect the local currency.
  • “In any case, we think the peso has now sufficiently adjusted and can be expected to regain relative stability going forward. This soft landing is reinforced by effective discipline in fiscal management and a well-designed and well-executed public investment program,” BSP Governor Nestor Espenilla Jr. said.
  • The BSP chief also warned speculators who “may want to take advantage by exaggerating for financial gain an otherwise healthy price correction to recover some of the price competitiveness.”
  • “The BSP will not tolerate such speculative behavior and stands ready to use its very ample international reserves and deploy its full policy and regulatory arsenal if necessary,” Espenilla said.
  • Espenilla said the BSP would continue to pursue a flexible and adaptive exchange rate policy.
  • Monetary authorities have time and again said the weakening of the peso is not a cause for alarm or panic.
  • The BSP has traced the volatility of the peso to the strong demand for dollars from companies expanding their operations in the Philippines.
  • “Each economy faces its own unique challenges and should therefore be deliberately implementing policies that suit its circumstances and needs. The Philippines is doing the correct thing in prioritizing a more investment-led economic growth,” he said.
  • Espenilla said allowing the peso to depreciate gradually to a more appropriate level is fully consistent with that strategy.

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