MANILA – The peso is “broadly stable” against the dollar, despite its recent decline to 10-month lows, Bangko Sentral ng Pilipinas Governor Amando Tetangco said Tuesday.
Tetangco said rising dollar demand due to capital outflows will be offset by remittances from overseas Filipinos and earnings from business process outsourcing (BPO) and tourism.
“If you look at a longer term view on the peso movements, we can see the peso has been broadly stable and maintained its broad competitiveness over the medium term,” Tetangco said.
The peso averaged at P50.173 to the dollar on Tuesday, from Monday’s close of P50.12.
Tetangco said the Federal Reserve could raise rates up to two times more this year after it increased the overnight borrowing rate by 25 basis points earlier this month.
The prospect of higher yields in the US could drive funds out of emerging markets like the Philippines, increasing demand for dollars, he said.
Tetangco, who kept key rates steady last week, said current policy settings are appropriate.
"Central banks have largely turned neutral, and see less urgency for further accommodation and would rather stay on hold," Tetangco said, describing the response to the Fed as "watchful pause."