Peso recovers at P58.865 vs USD
THE Philippine peso slightly recovered at P58.865 against the United States dollar on Tuesday.
According to the Bankers Association of the Philippines (BAP), the local currency opened at P58.97 and traded between P58.83 and P59.
The average level for the day stood at P58.955. BAP data also showed that the volume increased to $642.35 million from the previous session’s $400 million.
Economists said there was a healthy downward correction in the US dollar against major global currencies after Fed Vice Chairman Lael Brainard signaled a case for caution by noting that previous rate increases were still working through the economy.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., told The Manila Times that the peso also remained “stable” below the P59 levels for the third week.
Ricafort said the recent policy signals that could support the peso exchange rate include the “increased activity/intervention by local authorities in the local forex (foreign exchange) market to curb excess volatility/stabilize the peso.”
“This includes tighter restrictions in the reporting of banks’ foreign exchange transactions in terms of additional supporting documents and increased frequency of reports,” he added.
Last Friday, Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla told reporters that the central bank would not permit significant changes in the foreign exchange market.
Medalla added that BSP has been “very active” in the foreign exchange market to control the Philippine peso from depreciating and reduce excessive volatility.
“We will not allow excessive changes in the exchange rate. We, of course, sell strategically. It’s wiser to keep your powder dry and shoot later,” he said.
Asked whether the central bank would continue to be active in the currency market in the coming months, Medalla said, “It depends because there are so many other things that are happening outside the Philippines that are actually causing the dollar to weaken.”
Medalla underscored the BSP’s plans to boost central bank debt issuance to reduce the peso liquidity available for use in the market to purchase additional dollars, calling it a “more permanent form of sterilization.”