MANILA, Philippines — Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. remains unfazed by the hawkish signals from the US Federal Reserve, saying the BSP’s monetary policy decisions will be guided primarily by the Philippines’ own economic data rather than the Fed’s moves.
At the same time, the central bank governor vowed to defend the peso from speculative attacks as the local currency weakened toward record lows.
READ: Supercharged dollar sinks peso below 58
Speaking to reporters on Wednesday night, Remolona said the BSP is closely watching local developments in deciding when to cut its policy rate, which he previously said might happen ahead of the Fed’s easing move.
Earlier this week, Fed officials signaled a delay in cutting interest rates despite the slightly softer April consumer inflation in the U.S.
“We don’t care that much about when the Fed cuts. We care more about our data,” the BSP chief said.
”We follow the Fed very closely and what they decide is one data point for us, one among many others,” he added.
Less hawkish BSP
The peso became more volatile this week after Remolona struck a less hawkish tone and floated the possibility of two 25-basis point rate cuts this year, with the first one possibly in August depending on the data.
READ: BSP hints at policy rate easing by August
On Thursday, the local currency closed at 58.13 against the greenback after nearing the record-low of 59 to $1 which was hit in 2022. This was when the BSP failed to keep in lockstep with the Fed’s tightening actions.
The BSP can intervene in the market to temper foreign exchange volatility by selling some dollars from its reserves.
Remolona said the BSP has been intervening recently but only in “small amounts.” He said the central bank stepped into the foreign exchange market on Tuesday when the peso sank to the 58-per-dollar level for the first time since late 2022.
He stressed that the BSP has enough reserves to prop up the peso and defend it from speculative attacks.
Central bank data showed the country’s gross international reserves amounted to $102.6 billion in April, down from $104.1 billion in March.
”In situations in which the peso depreciates, there’s a tendency for stress, then the dealers [and] traders they tend to offer big amounts when they’re trying to sell the peso, and sometimes the price fluctuates more than before,” he said.
“So we try to control that. We want those who really need dollars to get the dollars at a reasonable price. We’re just trying to control the speculation,” he added.