MANILA - The Philippine peso's recent depreciation versus the US dollar is cause for concern, the head of the Bangko Sentral ng Pilipinas said on Thursday, even as the country imports more products to deal with local supply problems.
BSP Governor Benjamin Diokno said that the peso's performance was determined by supply and market conditions, and that all other currencies "depreciated vis-a-vis the dollar."
"That means it is the dollar that is strong, not the peso that is weak," Diokno said.
From 47.66 per dollar on June 7, the peso closed at 49.79 on July 7, according to data from the Bankers Association of the Philippines.
"We participate in the market only to minimize fluctuations. Our defense to the peso right now is our hefty, GIR [gross international reserves] and the steady inflow of dollars brought about by our steady sources, like OF [overseas Filipino] remittances, payments of BPO, and foreign direct investments," Diokno said.
it is determined by supply and market conditions. As you can see all currencies depreciated vis-a-vis the dollar.
RCBC chief economist Michael Ricafort meanwhile has flagged the weakening of the peso as a possible contributor to inflation moving forward.
Ricafort noted that while inflation eased to its lowest level yet this year in June, there are upside risks.
"The weakest peso exchange rate vs. the US dollar in nearly a year recently would gradually lead to some pick up in import prices and overall inflation," Ricafort said.
For the month of June 2021, the peso still appreciated by 1 peso or 2 percent from year-ago levels; however, the peso already slightly weaker compared to a year ago so far in July 2021,” he said.
Aside from relying on imported fuel, the Philippines has also turned to imported rice and frozen pork meat to address local supply issues.