P42.83 to a dollar? No way, says BSP | Inquirer Business

P42.83 to a dollar? No way, says BSP

MANILA, Philippines — The central bank may probe deeper into reports that the peso appreciated sharply on July 20 — as shown in unofficial currency converter quotes on Google — despite Philippine financial markets being closed due to the Eid al-Adha holiday.

This early, however, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said regulators doubted if any legitimate transaction was 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 central bank chief explained that the reported abrupt peso appreciation was captured by the currency quotes from Google and a certain social media platform.


“We would like to highlight that the source feed is not Bloomberg nor the Bankers Association of the Philippines (BAP),” he said. “The official sources are the Bloomberg and BAP only.”

The central bank said it believed that the apps that showed the drastic drop 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.”

Possible ‘feed error’

He cited the prevailing rule that, on holidays, the official exchange rate would be the rate of the previous business day.

The regulator added that it monitored other foreign exchange platforms, such as Reuters, for its market data sources and none showed this drastic movement.

“For [these] reasons, 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 was echoed by BAP 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 (currency converter app), and none showed this drastic move,” said Veloso, who is also president of Philippine National Bank.

Credibility issue

On Tuesday night, House tax chief Joey Salceda urged BSP to investigate the possible “flash crash” on July 20.

Salceda said that it was probably a human error, but was not discounting the possibility that “somebody bought an obscene amount of pesos with US currency.”

“In any case, this is something that merits the attention of the Bangko Sentral,” he said.

He warned that when these sudden crashes take place without explanation and different market makers yielded wildly different rates, it could be a problem for Philippine trade and the credibility of the peso as a currency.

He said that sudden spikes like this “could be very bad” for the country’s exporters who were still reeling from factory closures and work suspensions due to the pandemic.

“We want to watch out for events like this because we are a very foreign currency-dependent country, given our large OFW community. You don’t want wild gyrations like this, especially when based on faulty information, human error or technical issues,” he said.

Salceda added that traditional sources of foreign exchange data, such as the Tullett Prebon Electronic and Voice Interdealer Broker, showed that the peso-dollar rate trading ranged between P50.47 at the day’s low and P50.99 at the day’s high.

No real-time spike

He added that Reuters’ Currency Rates, which the Bangko Sentral uses, also showed no such real-time spike in the value of the peso.

Even Bloomberg, Salceda said, showed no signs of the peso’s spike, but there were reports that some retail traders were indeed able to buy and sell dollars at the rates as low as P42.83, which would be the year’s low.

“Of course, the exchange rate is floating, so you expect some variations in price, but not of these bands,” he said.

“Some trades at the wildly varied prices did pursue, however. So, some retail traders lost money on probably faulty information,” Salceda added.

Your subscription could not be saved. Please try again.
Your subscription has been successful.

Subscribe to our daily newsletter

By providing an email address. I agree to the Terms of Use and acknowledge that I have read the Privacy Policy.

Read Next
Don't miss out on the latest news and information.

Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.

TAGS: Bangko Sentral ng Pilipinas, exchange rate
For feedback, complaints, or inquiries, contact us.
Your subscription could not be saved. Please try again.
Your subscription has been successful.

Curated business news

By providing an email address. I agree to the Terms of Use and acknowledge that I have read the Privacy Policy.

© Copyright 1997-2023 INQUIRER.net | All Rights Reserved

We use cookies to ensure you get the best experience on our website. By continuing, you are agreeing to our use of cookies. To find out more, please click this link.