Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. warned that the peso could weaken further to P60 against the US dollar, but stressed that the bigger concern is the volatility of the exchange rate rather than its numerical value. Remolona explained that the peso's movement is currently driven by the strength of the dollar and that large swings in the exchange rate can lead to inflationary pressures. The BSP has previously intervened in the foreign exchange market to mitigate volatility and maintain the peso-dollar rate below P60. Despite signaling its intention to continue easing monetary policy, the BSP unexpectedly kept key interest rates unchanged on Thursday due to uncertainty in the global economic environment.
The peso remains vulnerable to further depreciation and could reach P60 against the dollar, according to Bangko Sentral ng Pilipinas ( BSP ) Governor Eli Remolona Jr. However, the primary concern is not the exchange rate itself but rather the volatility it exhibits. 'It is a possibility,' the central bank stated in a OneNews PH interview on Friday, adding that 'we don't worry too much about the number itself.
' 'We worry about large swings in the exchange rate because it's when we have large swings that we get this inflationary effect of the exchange rate,' Remolona emphasized.The peso's historical low of P59 against the dollar was first recorded in October 2022, attributed to the perception that the BSP was not sufficiently aggressive in raising interest rates to combat inflation. This level was again reached in November of the same year due to concerns regarding the pace of central bank easing and potential protectionist policies from then-US President-elect Donald Trump. Since then, the peso has recovered to the P58:$1 level but has been fluctuating this month following Trump's initiation of a trade war against key trading partners and threats to expand it globally. Despite Trump postponing another tariff announcement on Thursday, the peso closed at P57.83:$1 on Friday.Remolona explained that the peso's movement is currently driven primarily by the strength of the dollar, a trend observed since the beginning of the year. 'This is the story. Last year, that was most of the story. It was mostly dollar strength rather than peso weakness,' he added. Remolona noted that after accounting for dollar strength, the peso would have actually gained by 0.34 percent. He highlighted the potential inflationary pressures stemming from a weaker peso, as a significant portion of the country's imports are priced in dollars. The BSP has previously intervened in the foreign exchange market to mitigate volatility and aimed to maintain the peso-dollar rate below P60:$1. Concerns about inflation and economic growth prompted monetary authorities to unexpectedly keep key interest rates unchanged on Thursday.In a separate interview with CNBC on Friday, Remolona elaborated on this decision. 'We would have cut if not for this new factor of uncertainty that we're facing,' he stated. He further explained that the BSP's models, used to analyze the economy, did not adequately capture this new uncertainty. While the BSP has indicated its intention to continue easing, Remolona stressed the need for prudence. 'It's not just the uncertainty about trade. The uncertainty itself about what's going on is a factor. And so we thought we needed more time to deepen our analysis,' he said. 'We want to do 25 basis points at a time, and we want to do it in the same direction for a while. Now if we had to reverse ourselves, that means we're not on track,' Remolona added. With the benchmark rate currently at 5.75 percent following three 25-basis-point cuts last year, analysts believe there is still room for further reductions in the future. Bank of the Philippine Islands senior economist Emilio Neri suggested there is a chance the BSP could cut rates in June if first-quarter growth data, scheduled for release in May, continues to disappoint. Last year's GDP growth of 5.6 percent fell short of the official 6.0- to 6.5-percent target and was marginally better than 2023's projected 5.5 percent, which also missed the 6.0- to 7.5-percent goal. Economic managers will convene next month to evaluate and revise their macroeconomic assumptions
PHP Peso Dollar BSP Exchange Rate Inflation Monetary Policy Interest Rates Economic Growth Uncertainty
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
BSP chief: 75 bps in 2025 cuts 'might be too much'BAGUIO CITY — Monetary authorities could cut interest rates by just 50 basis points (bps) this year given lingering inflation risks, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. said on Saturday.
Read more »
BSP Holds Benchmark Rate Steady Amid Global Policy UncertaintiesThe Bangko Sentral ng Pilipinas (BSP) maintained the Philippines' benchmark interest rate at 5.75% in its February 2025 policy meeting, citing uncertainties surrounding global trade policies as a key factor. Governor Eli Remolona Jr. explained that the Monetary Board opted for a wait-and-see approach to assess the impact of global developments on the domestic economy before further easing monetary policy. The BSP, however, confirmed its intention to reduce banks' reserve requirement ratio (RRR) to 5% and hinted at a possible earlier-than-expected implementation.
Read more »
BSP chief: Likely rate cut for ’25 is 50 bps | Reine Juvierre S. AlbertoBAGUIO CITY—The Bangko Sentral ng Pilipinas (BSP) is sticking with its measured approach to monetary policy easing, likely reducing key policy rates gradually by 50 basis points (bps) this year. BSP Governor Eli M. Remolona Jr.
Read more »
AMA Bank Seeks BSP Clarification on Reopening and Pending MotionsAMA Rural Bank of Mandaluyong, Inc. (AMA Bank) is requesting clarification from the Bangko Sentral ng Pilipinas (BSP) regarding its position on AMA Bank's pending second Motion for Reconsideration with the Supreme Court and the bank's reopening. The BSP's statement claims that the pending motion does not prevent the bank from reopening and paying its depositors and creditors, but AMA Bank argues this contradicts the BSP's previous legal filings. AMA Bank is formally requesting the BSP to clarify its stance and either withdraw its conflicting legal arguments or confirm its press release as an official authorization for the bank's reopening.
Read more »
Metro Manila LGUs Collect Over P60 Billion in Business Permit Revenues in 2024Data from the Anti-Red Tape Authority (ARTA) shows that 14 local government units (LGUs) in Metro Manila collected over P60 billion in revenues from business permits in 2024, a nearly 14-percent increase from 2023. This growth is attributed to the full implementation of the Electronic Business One-Stop-Shop (eBOSS) system, which allows for online application submissions, payments, and issuance of permits and licenses. Quezon City led with P23.64 billion in revenues, followed by Taguig City with P12.47 billion.
Read more »
Rate-setting meeting rescheduled to Feb 13THE Monetary Board has rescheduled its first policy meeting for the year as Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. will be attending Financial Action Task Force (FATF) meetings that could see the country exiting a dirty money watchlist.
Read more »