The peso slid to 59.20 against the US dollar, its lowest intra-day trading level in history, due to concerns on the country’s growth prospects amid the ongoing crackdown on anomalies in government infrastructure spending.
But the Bangko Sentral ng Pilipinas (BSP) assured on Tuesday it would continue to allow the exchange rate to be determined by market forces.
‘We continue to maintain robust reserves. When we do participate in the market, it is largely to dampen inflationary swings in the exchange rate over time rather than to prevent day-to-day volatility,’ the BSP said in a press statement.
As of Tuesday morning, the peso’s weighted average stood at 59.098 against the greenback, based on data from the Bankers Association of the Philippines. The intra-day bottom of 59.20 set a new record low for the local currency.
On Monday, the peso sharply depreciated to 58.90 from Friday’s 58.625 finish against the US dollar.
‘The recent peso depreciation may reflect market concerns over a potential moderation in economic growth due in part to the infra spending controversy, as well as expectations of additional monetary policy easing by the BSP,’ the central bank said.
However, the central bank noted that the peso continued to be supported by ‘resilient remittance inflows, still relatively fast economic growth, low inflation, and ongoing structural reforms.’
It added that foreign exchange inflows from business process outsourcing, tourism and overseas Filipino workers continue to buffer external shocks.