The Bankers Association of the Philippines (BAP) vowed to be “part of the solution” in maintaining order in the domestic financial market after the Bangko Sentral ng Pilipinas (BSP) issued a stern warning against currency speculators as the peso trades near all-time lows against the US dollar.
“With global headwinds adversely affecting inflation and foreign exchange (FX) rates across the world, the BAP joins national efforts to minimize its impact on our people by avoiding activities that can only worsen the situation,” Antonio Moncupa, president of BAP, said in a statement on Wednesday.
“In order to be part of the solution, the banking industry continues to work closely with the BSP for orderly, fair and transparent markets minus the unproductive activities that only hurt the public,” he added.
Weak peso
The influential United States Federal Reserve has implemented a series of aggressive interest rate hikes this year to tamp down surging inflation, causing the disruptive depreciation of currencies around the world.
The peso alone has weakened over 15 percent against the greenback this year after hitting a record low of P59, putting further pressure on domestic inflation.
The BSP believes the situation was worsened by speculative trading. It sought to partially address the situation by imposing stricter foreign exchange reporting requirements on the local banking community, which was earlier revealed by Inquirer’s Biz Buzz.
The BAP said the statement “reaffirms its commitment to help maintain the orderly functioning of the fixed-income and foreign exchange markets.”
It comes a week after the BSP warned speculators “not to take undue advantage of changing market conditions.”
“This does not help the Philippine peso; it does not help the Philippines,” the BSP had said.
Supporting the regulator
The banking association also expressed support for the BSP’s policy initiatives “towards liberalization and transparent price discovery, including the conduct of its supervisory mandate that ensures orderly markets.”
“Together, we will work against speculative activities that tend to distort market prices and hurt the economy,” the BAP said.
Local inflation heated up to 6.9 percent in September, faster than the 6.3 percent surge the previous month, on costlier food and energy.
Meanwhile, BSP Governor Felipe Medalla said they remain “very active” in smoothening volatility in the currency market. Latest data from the BSP showed monthly dollar reserves falling by $2.4 billion to $95 billion at the end of September. INQ