Peso falls as BSP readies to fight off speculative plays on currency

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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.

 

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  • WeAry_Bat

    Supposing one bought P100 bonds when the rate was P40:$1.  When it earned P105, the peso had appreciated at P35:$1. 

    So instead of exchanging local currency for total of $2.625, instead $3 is gained.

    The US and Europe rebound from their financial problems.  Shark investors sense the Philippines is ripe from rosy, fake picture of economic growth from capital inflows but not real productivity from exports and manufacturing. 

    Hysteria is triggered, capital goes out and rate becomes P50:$1.

    The $3 is exchanged becoming P150.  From P100 to P150 by speculating, and manipulating when necessary. 

    But I like to think Philippine bankers and regulators are smarter than me, and doing their way to keep such financial disasters from happening.

  • joboni96

    hayaan mo na speculators na iyan
    kulang capital nila to be successful

    bayaran na lahat ng foreign loans ng gobyerno
    ng hindi 1/4 ng national budget pinambabayad ng utang

    at magamit na para sa mga projects

    malaki pa maiiwang forex reserves

  • tilney

    Govt should stop issuance of global bonds in peso..this should be in dollars to avoid speculation on peso denominated global bonds where an appreciation of peso is a must to every investors buying such bonds.

  • http://pulse.yahoo.com/_AYITA5V33GYZSLC3G37UCVNTKA Ben

    The government should help the central bank and the economy as a whole by sourcing their loans for their PPP projects in the central banks $82 billion dollars reserve in its vault or the central bank should pre-pay/ retire debts or the government should seek loans in the central bank to fund the AFP modernization and marshall plan type of rehabilitation for Mindanao as well as road dike systems. At least the interest  of the loan will go to the central bank instead of foreign entities and help lower the upward pressure on the peso, in which is hurting our export and OFW life line…not unless our industrial base is strong enough to keep the domestic growth moving.

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