Peso touches 51: $1, lowest in 11 years

MANILA, Philippines - The peso touched the 51 to $1 level anew and lost 18 centavos yesterday to close at its lowest level in 11 years as tensions ramped up between the US and North Korea.

Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said authorities would make sure the movement of the local currency is in line with the country’s economic fundamentals.

“We’re constantly monitoring peso developments for excessive short -term volatility not consistent with underlying economic fundamentals and take appropriate action when necessary,” he said.

The central bank adheres to market-oriented foreign exchange rate policy and ensures orderly conditions in the market.

The peso closed at 50.98 to $1 from 50.795 to $1 last Thursday, the lowest level since closing at 51.05 to $1 on Aug. 29, 2006.

It opened weaker at 50.9 but hit an intraday low of 51.08 to $1. Volume amounted to $690.1 million from $692.55 million last Thursday.

“We recognize that the market is also often self-correcting,” Espenilla said.

Monetary authorities are not alarmed as the peso continued to flirt with the 51 to $1 level as the local currency is just reflecting market conditions and underlying fundamentals.

“We have seen nothing particularly unusual about this, it’s the nature of the exchange rate to fluctuate. As far as the BSP is concerned, we are there, we are managing excessive volatility,” he said earlier.

The BSP chief urged investors “not to look at it on a day to day basis and don’t stress.”

On Thursday, the BSP’s Monetary Board kept interest rates unchanged as domestic economic activity continues to be firm while inflation environment remains manageable.

Citi managing director and head of Asia Pacific Economic and Market Analysis Johanna Chua said the peso is seen ending the year at 51.1 to $1 to reflect the projected current account (CA) deficit this year in light of strong imports of capital equipment and raw materials.