BSP says it is present in forex market

Reuters

Posted at Jan 17 2014 05:30 PM | Updated as of Jan 18 2014 01:30 AM

MANILA - The Philippine central bank is present in the foreign exchange market to curb excessive volatility, although the peso's weakness due to uncertainty over the pace at which the U.S. will cut stimulus is having no major inflation impact, its governor said on Friday.

Inflation this year and up through 2016 will remain within target ranges, although the 2014 average rate will likely be above the midpoint of the 3-5 percent annual goal, said Amando Tetangco, governor of the Bangko Sentral ng Pilipinas (BSP).

"The BSP will be present in the market to curb excessive volatility in the rate movements," Tetangco told Reuters in his Manila office. "We are there. When we decide to make a move the market will know, and they will feel it."

The peso, the worst performing Asian currency so far this year, hit a more than three-year low on Thursday.

With inflation over the horizon still manageable, the BSP can still maintain its record low interest rate, Tetangco said, adding authorities were watching the policy actions of major economies, such as the United States, European Union and Japan and will consider adjustments as needed.

For setting monetary policy, "we always consider the actions of monetary authorities in major economies, especially the US, EU and Japan," he said. "We adjust our stance of policy over the course of the policy horizon as appropriate... with what is happening both domestically and internationally."

The central bank next meets to review policy on Feb 6. Its policy rate has been at a record low of 3.5 percent since October 2012, but analysts expect it to start tightening as early as the second quarter.