BSP’s guard up as PH welcomes credit upgrade

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As the country welcomes the investment grade it received from Standard & Poor’s, the Bangko Sentral ng Pilipinas is rolling up its sleeves to prevent an asset price bubble that may arise from the bullish sentiment of portfolio investors in the economy.

The BSP said the move of S&P on Thursday to lift the country’s credit rating from junk-bond status to investment grade would make peso-denominated securities more attractive to fund owners—locals and foreigners alike.

As a result, the central bank would need to closely monitor financial markets and prevent asset prices from rising sharply.

“The BSP remains vigilant for any asset price bubbles and/or other vulnerabilities that cause financial instability,” it said in a statement Friday.

The statement was issued just as the Philippine Stock Exchange Index hit a record high and as the peso strengthened back to the 40-to-a-dollar level during intraday trading yesterday.

The move of S&P came after Fitch Ratings raised the country’s credit last March.

Prior to the upgrade, the BSP had already implemented several measures to tame the effects of a surge in foreign portfolio inflows.

Some of the measures included the prohibition of foreign funds from being invested in special deposit accounts (SDAs), the imposition of higher capital requirement on banks’ exposure to non-deliverable forwards, relaxation of foreign exchange rules, and reductions in the SDA interest rate.

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  • Ako_Hiking

    Big companies and the rich may welcome all these upgrades but the poor masses have no idea how this all benefits them because they all continue to suffer from poverty and unemployment.

  • eight_log

    A bunch of FIREFIGHTERS … that’s what they are!!!! Stop-gap solutions … only invite speculations and hence … bubble formation!!!! LACK OF FORESIGHT only manifests lack of confidence and, therefore, points to obscured future!!!!

  • joboni96

    hangal itong bsp

    pinapatira kayamanan ng pilipino
    sa hot money sa stock market

    mga amigo kasi ng bsp
    ang mga foreign carpetbaggers na mga iyan

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