No peso meltdown despite 3-month low vs $, says BSP

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) said the Philippines is far from any foreign exchange crisis, dismissing concerns of a peso meltdown as the local currency hit a fresh three-month low.

In a text message to reporters, BSP Governor Nestor Espenilla Jr. said a peso meltdown is not expected because the country’s underlying economic fundamentals are healthy.

“The peso is just fine. Demonstrating flexibility, reflecting day-to-day market conditions,” he said.

Espenilla, however, said the global financial market conditions remain volatile.

“There will be volatility, runs and corrections, and the public should plan accordingly and factor in exchange risk in their decisions. But the peso is not expected to melt down because the underlying economic fundamentals of the economy are healthy,” he said.

The peso shed 29 centavos to close at 51.58 from Wednesday’s 51.295 to $1. This was the lowest level for the peso since closing at 51.61 to $1 last Oct. 30.

The local currency opened weaker at 51.3 and touched an intraday low of 51.59. Volume reached $878.15 million, lower than $943.05 million last Wednesday.

The peso has been depreciating together with other regional currencies after a strong recovery back to the 50 to $1 level late last year due to robust remittances from Filipinos abroad.

Espenilla said the country’s balance of payments (BOP) shortfall remains manageable amid the strong imports of capital equipment and raw materials to support the growing economy.

“The BOP deficit is very manageable and is but a reflection of an economy that’s growing rapidly in a way that is sustainable,” he said.

The country, he added, has enough buffer with the gross international reserves (GIR) hitting $81.5 billion in end-December, enough to cover 8.3 months’ worth of imports of goods and payments of services and primary income.

“We are very far from any foreign exchange crisis given our large GIR buffer and secondary buffers as well as investment grade-rating that guarantees ready market access for any official and commercial financing requirement,” he said.

Moody’s Investors Service, S&P Global Ratings, and Fitch Ratings rate the country’s debt at a notch above minimum investment grade.