MANILA, Philippines — Bankers vowed to work against speculative activities in the foreign exchange market that tend to distort prices and hurt the economy, according to the Bankers Association of the Philippines.
BAP president Antonio Moncupa Jr. said the organization remains committed to helping maintain the orderly function of the fixed-income and foreign exchange markets.
“With global headwinds adversely affecting inflation and foreign exchange rates across the world, the BAP joins national efforts to minimize its impact on our people by avoiding activities that can only worsen the situation,” he said.
Moncupa, who is also vice chairman of Gotianun-led East West Banking Corp., said BAP supports the initiatives of the Bangko Sentral ng Pilipinas (BSP) by maintaining an orderly financial market.
“We appreciate and support the policy initiatives of the BSP toward liberalization and transparent price discovery – including the conduct of its supervisory mandate that ensures orderly markets. Together, we will work against speculative activities that tend to distort market prices and hurt the economy,” he said.
A day after the peso hit an all-time low of 59 to $1 on Oct. 3, the BSP issued a statement warning those “who have the means not to take undue advantage of changing market conditions.”
The regulator urged companies to source their dollar requirements from legitimate sources, to mitigate speculative moves, so as not to add volatility in the foreign exchange market.
“The dollar spot market remains open and active while forwards and repos are available facilities. All of these can move the economy forward by supporting the financial leg underpinning economic activity and allowing for an orderly settlement of dollar obligations. This puts the Filipino in a better position,” the BSP said.
Speculative attacks occur when there is excessive, large volume of foreign exchange selling in the hope that the central bank would run out of gross international reserves (GIR). This could result in a currency crisis, wherein speculators with a foreign currency hoard may dictate market price.
Major currencies including the peso have depreciated heavily against the dollar due to the series of jumbo rate hikes delivered by the US Federal Reserve to tame inflation.
The local currency weakened by more than 15 percent to hit new record lows from the end-2021 level of 50.999 to $1.