MANILA – Bangko Sentral ng Pilipinas Governor Amando Tetangco said monetary authorities would guard the peso against “excessive” depreciation, after analysts predicted the local unit to weaken further this year.
The peso weakened to P50.225 on Friday, as a US air strike on Syria rattled global markets.
Tetangco said high dollar demand due to the importation of capital goods and construction materials and weak exports contributed to the weakness of the peso, which had hovered at its lowest levels in 10 years.
“The policy of the Bangko Sentral with respect to the exchange rate is to basically allow the peso to respond to market forces but with scope for possible official participation in the foreign exchange market if the movements become too sharp or too erratic,” Tetangco told Bloomberg Television.
“We don’t go against the fundamental trend. As an inflation targeter, a central bank would be sort of agnostic to exchange rate movements, but if the exchange rate movements become excessive, there’s scope for official action at that point, he said in the interview aired Friday.
The peso could weaken to P51.80 to the dollar within the next 12 months and P50.80 in the next three months, Credit Suisse economist Michael Wan said earlier this week. The local unit had underperformed compared to other Southeast Asian currencies, he said.