BSP ready for excessive currency swings

MANILA, Philippines - The Bangko Sentral ng Pilipinas said yesterday it is ready to step in to counter any excessive swings in the foreign exchange market.

“We only participate in the foreign exchange market to smoothen the sharp fluctuations in the rate,” BSP Governor Amando M. Tetangco Jr. told reporters.

The peso closed at 43.68 yesterday, 10 centavos weaker than Friday’s close of 43.67 to a dollar.

The central bank allows the peso to depreciate or appreciate against the greenback as it has a hands-off policy on foreign exchange trading unless excessive volatilities are observed.

“Our foreign exchange policy (is) we allow the market to basically determine the rate,” Tetangco said.

In the first seven months of the year, the peso stood at an average rate of 44.352, near the lower end of the government’s 42 to 45:$1 target range.

In 2013, the peso’s movement was largely driven by the markets’ anticipation of the US Federal Reserve’s reduction in its massive monthly asset purchases, which finally started in January.

Waves of volatility hit global financial markets last year as investors and central banks across the world rebalanced their portfolios and sold off assets in different markets.