BSP dispels meltdown fears as peso slides to 2-month low

Reuters

Posted at Feb 01 2018 05:24 PM

MANILA - Bangko Sentral ng Pilipinas Governor Nestor Espenilla on Thursday dismissed suggestions there could be a meltdown of the peso, which hit a two-month low against the US dollar, saying the currency was supported by healthy economic fundamentals.

The peso closed at P51.58 to the dollar from P51.295 on Wednesday, according to the Philippine Dealing System.

"There will be volatility, runs and corrections, and the public should plan accordingly and factor in exchange risk in their decisions," Espenilla told reporters.

But he said the Philippines was "very far from any foreign exchange crisis" given its large foreign exchange reserves and "secondary buffers" as well as the country's investment grade-rating.

Espenilla also said planned cuts in banks' required reserves were part of financial market reforms and not meant to change the stance of
monetary policy.

"Forthcoming reductions in RRR should not be mistaken as a change in monetary policy stance," he said in a text message.

The central bank has flagged a plan to eventually reduce the reserve requirement ratio, currently at 20 percent and one of the highest in the region, as it reduces its reliance on this tool to manage liquidity.