MANILA — Bangko Sentral ng Pilipinas chief Amando M. Tetangco Jr. denied that the weakness of peso will affect consumer price movements saying that there are significant improvements in the country’s economy.
He noted that BSP has sufficient foreign exchange reserves.
“If we isolate the impact of the peso, I don’t think it’s going to be significant,” Tetangco said during the government’s midyear economic briefing on Tuesday.
He also stressed that the “pass-through” effects of movements in foreign exchange went down. Last Monday, Philippine peso finished at 45-to$1 before closing at 44.995, the lowest in four months.
On Tuesday, peso closed at 44.875 to a dollar. It’s the BSP’s responsibility to protect the public’s purchasing power by maintaining consumer prices stable.
This September, the Central Bank expects inflation to be at 4.1 and 4.9 percent. The target for this year is 3 to 5 percent.
Tetangco said that the Central Bank will continue to support the market forces to strengthen the peso. But he added that they have the right to intervene in the market to smoothen out spikes. This can be done through the use of BSP’s gross international reserves (GIR) to buy and sell dollars which may eventually play a role in the value of peso.
The country has $80.95 billion worth of dollar reserves in July. This is sufficient to cover almost 11-months worth of exports.
Aside from the peso, other currencies in the region have depreciated against dollar because of shifting investor sentiment. Last week, official records showed that the economy of USA increased by 4.6 percent – the best since 2011.
But Tetangco noted that the peso continues and has fared well in terms of stability.