Peso falls as BSP announces plan to curb currency speculationBy Michelle V. Remo |Philippine Daily Inquirer
The local currency closed at 40.965 against the greenback, down by 11.5 centavos from the previous day’s finish of 40.85:$1.
Intraday high hit 40.85:$1, while intraday low settled at 40.97:$1.
Volume of trade amounted to $676.4 million from $754.2 million previously.
Traders said the statement from the BSP prompted some portfolio investors to shift their investments to dollars.
On Wednesday, BSP Governor Amando Tetangco Jr. said the central bank has been looking at imposing a cap on the non-deliverable forwards (NDFs) held by banks as a means to curb currency speculation, which was believed to be one of the reasons behind the significant appreciation of the peso since the start of 2012.
NDFs are hedging instruments intended to keep exporters and importers from losses resulting from exchange-rate fluctuations. However, the BSP believes NDFs also are being used by investors and banks to earn from currency speculation.
The nearly 7-percent appreciation of the peso since the start of the year has made it one of the strongest Asian currencies but has elicited complaints from the export sector. Exporters said the strengthening of the peso has made Philippine-made goods more expensive in dollar terms and, therefore, less competitive.
The BSP said it has allowed the exchange rates of the peso to be generally flexible, but stressed that appreciation or depreciation of the currency due to speculation should be curbed.
It said speculation could cause excessive volatility of the exchange rate that could harm businesses and the economy.