The Bangko Sentral ng Pilipinas continued to post losses by the end of November 2011 as it beefed up expenses and engaged in heavy dollar buying to prevent the peso from sharply appreciating.
Although the BSP has a policy of allowing the value of the peso to be determined by the market, officials still intervene from time to time to avoid any sudden rise or decline of the local currency.
A volatile currency tends to hurt businesses and the economy in general, they explained.
Documents from the BSP showed that from January to November, it incurred a net income loss of P32.39 billion. But the amount was an improvement from the P48.25-billion loss it registered in the same period the previous year.
The latest income loss was attributed to the central bank’s foreign exchange trading operations. Losses from trading operations actually amounted to P38.27 billion. Also, its income from other sources added to the central bank’s net loss by nearly P6 billion.
BSP Governor Amando Tetangco Jr. said the income loss was necessary to help prevent the adverse effects of a volatile currency.
The central bank has the mandate of helping the economy run smoothly. And if achieving the mandate were to entail higher expenses on trading operations, then the losses could be considered a necessary consequence, he said.
The BSP earlier reported that the peso’s volatility—the degree of fluctuation against the US dollar—stood at 1.23 percent last year (data as of Dec. 20).
The peso averaged at 43.27 against the US dollar in November last year, slightly stronger than the 43.49 registered in the same period the previous year.