THE PHILIPPINE PESO on Wednesday slumped against the US dollar, closing at its lowest value since November 2005, amid the Bangko Sentral ng Pilipinas’ (BSP) signals of gradual policy tightening.
The BSP is widely expected to fire off a 25-basis-point hike at its policy meeting today to curb inflation.
The local unit’s weakest showing was at P54.635 on Wednesday, the lowest since March 2003. Its intraday best was P54.30 against the greenback.“The peso’s performance continues to be driven by fundamental factors such as a strong dollar and the country’s increasing import demand,” China Banking Corp. Chief Economist Domini S. Velasquez said in a Viber message.
“The BSP’s dovish stance on monetary policy normalization against aggressive rate hikes of the Fed contributed to the recent weakening of the Philippine peso. Even if BSP hikes its policy rate by 25 bps in every meeting this year, we expect domestic policy rates to continue to lag behind,” Ms. Velasquez said.
BSP Governor Benjamin E. Diokno and current Monetary Board member Felipe M. Medalla have said it is unlikely that they will raise key rates by more than 25 bps in today’s meeting.es that we know something bad that you don’t know. It could be misread, as ‘wow, what does the central bank know that we don’t know,’” Mr. Medalla said during a roundtable withThe BSP still has the “luxury of time and large reserves,” Mr. Medalla said at that time.
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