BSP Governor Amando M. Tetangco Jr.: Call for calm. INQUIRER FILE PHOTO
MANILA, Philippines—The central bank has called for calm in financial markets following statements by the United States’ top monetary official emphasizing the need for continued stimulus to support the American economy.
This comes amid the continued volatility in financial markets due to jitters over the pace of the tapering of the US Federal Reserve’s monthly bond-buying program.
“As expected, Fed Chair (Janet) Yellen emphasized the principles of the continuity of policy, of being data-dependent, and of not having a pre-set course on policy,” Governor Amando M. Tetangco Jr. of the Bangko Sentral ng Pilipinas (BSP) said. “This means the markets will be well-served if they are circumspect and if they also watch how the economic data unfold.”
In her first appearance before US lawmakers earlier this week, Yellen said the US Fed would not make any abrupt changes in monetary policies in the world’s biggest economy.
She hinted that the Fed would continue cutting its monthly bond-buying program, which stands at $65 billion from the original $85 billion. But the newly appointed Fed chief added that policies supportive of growth would be maintained until more signs of a stronger recovery become apparent.
The Fed’s asset purchases or quantitative easing were introduced in late 2009 to drive interest rates down in support of the American economy.
Last week, the BSP reported that its gross international reserves, which serve as the last line of defense from external economic shocks, stood at $78.94 billion in January. This was $4.3 billion lower than the $83.17 billion recorded the previous month. The BSP attributed the drop to its foreign exchange operations.
Although the BSP allows market forces to determine the peso’s movements, the central bank intervenes in foreign exchange markets from time to time to smoothen out extreme movements in the peso’s value against the dollar.
Latest data from the central bank showed that net outflow of foreign investments from the start of the year to Jan. 24 reached $1.13 billion, a stark reversal from the net inflows of $1.19 billion in the same period a year ago.