No deals made at wrong P42:$1 exchange rate because of holiday—BSP
MANILA, Philippines—The Bangko Sentral ng Pilipinas (BSP) was likely to investigate further reports that the peso appreciated sharply on Tuesday (July 20) despite financial markets being closed due to the Eil al-Adha holiday.
The sharp rise in peso was shown in unofficial currency converter quotes on Google.
In a statement, however, BSP Governor Benjamin Diokno said regulators doubt if any legitimate transactions were made at the peso’s supposed peak of P42.83 to $1, which represented a 15-percent appreciation from the currency’s previous official close of P50.34.
“That someone would be willing to trade at these off-market prices using these apps can warrant further investigation,” he said in a mobile phone message to reporters.
The BSP chief explained that the supposed abrupt peso appreciation was captured by currency quotes from Google as well as a certain social media platform.
“We would like to highlight that the source feed is not Bloomberg nor the Bankers Association of the Philippines,” he said. “The official sources are the Bloomberg and BAP only.”
The BSP believes that these applications that showed the drastic fluctuation in the peso-dollar exchange rate had an error in its source feed.
“July 20 was a Philippine holiday and domestic markets were shut,” Diokno said. “This means that there was no live official data source for the spot market.”
He explained the prevailing rule that, on holidays, the official exchange rate will be the rate of the previous business day.
In addition, the BSP observed various foreign exchange platforms, such as Bloomberg and Reuters, which is what the BSP uses for market data sources, and none showed this drastic movement.
“Moreover, we highly doubt that there were any material transactions dealt at those rates as these would definitely be ‘off market’ and would be subjected to internal reviews of these platforms,” he said.
“For the reasons above we believe that the particular applications for dollar-peso pricing was caused by a pricing feed error, exacerbated by the Philippine holiday,” Diokno said.
This message was echoed by Bankers Association of the Philippines president Wick Veloso who noted that the Muslim holiday meant the markets were shut and there was no live feed and no official data source for the spot foreign exchange market.
“We observed various other foreign exchange apps such as Bloomberg and XE, and none showed this drastic move,” he added.
