Peso falls as BSP readies to fight off speculative plays on currency
The peso ended the trading day at its intraday low of 41.08 against the US dollar, down by 6 centavos from the previous day’s finish of 41.02:$1, on Thursday, Dec. 13, 2012. AFP PHOTO
MANILA, Philippines—The peso fell slightly on Thursday with the central bank insinuating again that it is prepared to counter speculations on the local currency.
The peso ended the trading day at its intraday low of 41.08 against the US dollar, down by 6 centavos from the previous day’s finish of 41.02:$1.
Intraday high hit 41:$1. Volume of trade amounted to $683.6 million from $810.6 million previously.
On Thursday, the Bangko Sentral ng Pilipinas decided to keep its key policy rates steady, saying further rate cuts were not needed, given favorable performance of the economy and manageable inflation.
The decision to keep policy rates steady instead of cutting the same helps prevent a drop in the yields of portfolio instruments, which should be encouraging to securities investors.
However, the BSP said the decision to keep rates steady should not be viewed as its welcoming of speculative types of foreign portfolio investments.
In fact, the BSP said, it would implement “macro-prudential” measures (which are measures that have nothing to do with interest-rate adjustments) if deemed necessary to prevent a surge in speculative capital flows.
“We are mindful of capital flows,” BSP Deputy Governor Diwa Guinigundo said Thursday after the meeting of the central bank’s Monetary Board.
“However, macro-prudential measures are more appropriate and more effective in addressing the issue of capital flows,” he added.
Pronouncements against speculations are seen to help discourage speculative demand for peso-denominated securities.
