BSP stands ready to curb peso volatility

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) said yesterday it stands ready to curb any excessive volatility in the peso’s movements against the dollar.

BSP Governor Amando M. Tetangco Jr. said this amid the weakening streak of the peso, which went back to 44-to-a-dollar level last Monday.

“As we understand it, the peso weakness over the past couple of days is partly due to real demand for specific import requirements and partly due to some portfolio adjustment of funds in reaction to Fed (US Federal Reserve) tapering concerns,” Tetangco said.

“We are closely monitoring developments, and, as is our policy, will maintain a strategic presence in the market, as needed to curb excessive volatility in foreign exchange rate movements,” he added.

The peso on Wednesday closed at a 44.12 per dollar, strengthening from Tuesday’s finish of 44.29:$1. Tuesday’s close was the lowest since Sept. 6.

Eduardo Francisco, president of BDO Capital & Investment Corp., said foreseen rise in remittances due to the Christmas may partly strengthen the peso before the year ends.

“[I] believe it will remain weak but hope it will be back to 43.50:$1 level by year end as more remittances come in,” he said.

Historically, the volume of remittances are highest during December due to the Christmas season. But the central bank earlier noted the volume may even be higher this year as Filipinos abroad may send more to their families following the devastation of recent calamities.

Analysts have cited favorable US economic data which may prompt the US Fed to scale back its $85 billion a month bond-buying program as the reason behind the peso’s weakening against the greenback.

Earlier this week, the US Labor Department announced the jobless rate fell to a five-year low of seven percent in November as 203,000 jobs were added in the same month.

At the same time, the US Commerce Department last week revised third quarter gross domestic product estimates upward at 3.6 percent, the highest seen since the first quarter of 2012. The revision was from a 2.8 percent announced earlier.