The Bangko Sentral ng Pilipinas (BSP) on Sunday said that it does not expect the recent depreciation of the Philippine peso to lead to a “free fall.”
“We don’t expect it to do a free fall because of our economic fundamentals now, unlike before, are solid and very strong. This is reflected in our investment grade rating,” BSP Governor Nestor A. Espenilla, Jr. said in a text message.
“As the recent IMF Mission observed, we’re doing well and the economy is not overheated. Nonetheless, the BSP stands vigilant. Let’s calm down. We’re on the right track,” he added.
The International Monetary Fund last week downgraded the country’s economic growth outlook after a weaker-than-expected performance in the first quarter of 2017.
This comes after the peso on Friday morning breached the P51.00:$1 level, amid concerns about the escalating tensions between the United States and the Democratic People’s Republic of Korea.
It then closed Friday at P50.980:$1, the weakest in nearly 11 years since it closed at P51.050:$1 on August 29, 2006.
“The peso is market determined. It’s natural for it to show volatility as it adjusts to market conditions and all the short-term uncertainties such as increased tension in North Korea,” Espenilla said.
North Korea last week said it is already considering plans for a missile strike on the US Pacific territory of Guam, following remarks of President Donald Trump that any threat to the United States would be met with “fire and fury.”
“The peso is capable of correcting itself as the market calms down and digests the relevant information. Moreover, BSP will always be there strategically if volatility is considered excessive,” Espenilla said.
“We have a huge pile of fx [foreign exchange] reserves to play an effective stabilizing role. The Philippines is an emerging market economy that wants to grow” he added. — BM, GMA News