MANILA — The Philippine peso weakened but in a smaller increment compared to its peers in the region, Bangko Sentral ng Pilipinas Governor Eli Remolona said.

In just two weeks, the peso lost P2.07 in value versus the US dollar. From 54.77 at the start of the month, the peso was at 56.84 at the close of August 15 trading, according to the Bankers Association of the Philippines.

But in an economic briefing in Laoag on Monday, Remolona said the peso this year has actually improved compared to its P59 to $1 high in October 2022.

Remolona said the recent peso depreciation was due to the US Federal Reserve's interest rate hike and the Fitch Ratings' US credit rating downgrade.

"Compared to our neighbors, the peso has weakened only slightly. The peso is somewhere in the middle. Since the beginning of the year, the peso has depreciated by less than 1 percent," Remolona said.

He said "this depreciation is smaller than those of our neighbors" such as the Japanese yen, Thai baht and South Korean won.

The exchange rate is part of the BSP's consideration when adjusting monetary policy, Remolona said.

Since keeping its benchmark rate at a historic low of 2 percent during the pandemic, the BSP has raised it by 425 basis points to 6.25 percent.

The central bank chief said inflation expectations remain "well anchored." Inflation is expected to settle within target by 2024 and to stay there in 2025, he said.

After pausing interest rate hike for 2 consecutive meetings, the BSP is "reassessing the situation," Remolona said.

"That's our stand. We will go where the data lead us but sometimes the data don't seem to know where to go," he said.

The Monetary Board will hold its policy-setting meeting on Aug. 17.

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