Bangko Sentral expects peso to remain stable and resilient

0
1

Credit: Read the original article from Manila Standard Business.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Friday the peso is resilient and stable amid the COVID-19 pandemic and will remain strong in the near-term period.Diokno said in an online briefing the peso appreciated 5.4 percent against the US dollar as of Dec. 10 this year relative to its end-December 2019 level.  The peso closed at 48.085 against the greenback Friday.“The local currency has also performed better compared to other Southeast Asian currencies and appreciated vis-à-vis the US dollar along with the Chinese yuan, Taiwanese dollar, South Korean won and the Japanese yen, year-to-date,” Diokno said.He cited analysts’ expectation that the peso would remain strong in the near term and maintain its resiliency as one of Asia’s top-performing currencies.“The peso’s strength can be attributed to sound macroeconomic fundamentals characterized by a benign inflation environment, a strong and resilient banking system, prudent fiscal position and a sufficient level of international reserve buffer,” said Diokno.“The peso should continue to reflect emerging demand and supply conditions in the foreign exchange market as well as the continued soundness in the country’s macroeconomic fundamentals over the near term,” he said.Diokno said the impact of expected weaker inflows such as the decline in exports and tourism receipts should be offset by favorable investor sentiment over the strong position of the economy including in terms of sound debt management and adequate FX cover.

He said the peso and other financial markets should benefit from the gradual reopening of the economy amid the decline in COVID-19 cases and ample policy support coming from both monetary and fiscal authorities.“Moving forward, risks could emanate from uncertainty arising from potential resurgence of COVID-19 cases and its impact on the domestic and global economy. This may include the negative impact of the pandemic and the subsequent policies on travel restrictions on overseas Filipino  deployment and tourist arrivals,” Diokno said.He said the weak market sentiment might persist if the availability and deployment of safe and effective vaccine was delayed.Diokno said the BSP remained committed to a flexible exchange rate system. At the same time, it relies on a set of measures to cushion the impact of sharp peso movements such as maintaining a healthy level of FX reserves as a buffer, reviewing and calibrating existing macro-prudential measures, he said.Diokno said complementary and targeted measures also include the BSP’s liquidity enhancing and management tools such as the US dollar repo facility, exporters’ dollar and yen rediscounting facilities and the enhanced currency rate risk protection program.The BSP granted operational relief measures for FX transactions to facilitate the public’s access to the FX resources of the banking system to help finance legitimate transactions.

LEAVE A REPLY

Please enter your comment!
Please enter your name here