BSP: Peso not performing poorly

By Anna Leah Gonzales

April 17, 2024, 3:01 pm

MANILA – Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. said the peso's performance lately could not be categorized as poor, adding that the local currency is only adjusting to recent developments in the Middle East and announcements on Federal Reserve's possible delayed interest rate cut.

"I wouldn't say it's performing poorly. I would say it's adjusting to some events, initially weakened along with other emerging market currencies by the way because of what's going on in the Middle East," Remolona said in a briefing at the BSP Office in Manila.

Earlier this week, Iran fired missiles toward Israel.

"More recently, I guess today, I think it's adjusting to news, to [Federal Reserve Chair Jerome] Powell's speech that maybe they won't ease until September or September's how people interpret what Powell said. There's a postponement on 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," said Remolona.

"That's not a case of a weak peso, it's a case of a strong dollar. Unless the movements are very sharp, we tend to allow the adjustment to happen," he added.

The peso on Tuesday closed at 57 to a US dollar.

The last time the peso breached the 57-level was on Nov. 22, 2022.

Sought for comment on whether tensions in the Middle East are worrying the BSP, Remolona said, "I think so far so good because there is no sense of escalation."

"I think they will pretend to retaliate against each other but the retaliation will not be massive," he said, adding that he is hopeful that the hostilities would not escalate further.

Remolona said that so far, the peso's performance would also not likely affect inflation expectations.

"The magnitude of the adjustment of the peso has not been large enough to affect the inflation expectations so for now I think the impact on monetary policy is for now, not large," said Remolona.

"It might be a factor depending on what happens between now and the next monetary policy setting but the adjustment so far is not gonna change what I think we might be doing," he added.

The BSP's Monetary Board is scheduled to have its next meeting on May 16. (PNA)