Philip­pine cen­tral bank head seeks calm as peso hits 11-year low

Muscat Daily - - BUSINESS -

Manila, Philip­pines - Bangko Sen­tral ng Pilip­inas gov­er­nor Nestor Espe­nilla called for calm on Sun­day af­ter the peso fell to an al­most 11-year low against the dol­lar last week, say­ing the cur­rency isn’t ex­pected to free fall given the na­tion’s strong eco­nomic fun­da­men­tals.

“The peso is mar­ket-de­ter­mined. It’s nat­u­ral for it to show volatil­ity as it ad­justs to mar­ket con­di­tions and all the short-term un­cer­tain­ties such as in­creased ten­sion in North Korea,” Espe- nilla said in a phone mes­sage to re­porters. “We don’t ex­pect it to do a free fall be­cause our eco­nomic fun­da­men­tals now, un­like be­fore, are solid and very strong.”

The peso has lost 2.5 per cent this year, mak­ing it the worst per­former among 12 Asian cur­ren­cies tracked by Bloomberg. It weak­ened to 50.98 to the green­back on Fri­day, the low­est since Au­gust 29, 2006. The cur­rency has been drop­ping as the na­tion heads to its first cur­rent ac­count deficit in 15 years. Geopo­lit­i­cal con­cerns have also spurred a flight to as­sets of ad­vanced economies. Still, the na­tion en­joys strong do­mes­tic de­mand and is one of the fastest-grow­ing economies in the world.

“The peso is ca­pa­ble of cor­rect­ing it­self as the mar­ket calms down and di­gests the rel­e­vant in­for­ma­tion,” Espe­nilla said. He added that the cen­tral bank can act ‘strate­gi­cally’ if there’s ex­cess volatil­ity, not­ing a ‘huge pile of FX re­serves’.

Espe­nilla, who took over as cen­tral bank chief last month, also said that the Philip­pines, as an emerg­ing mar­ket econ­omy seek­ing to grow, is bound to run mod­er­ate cur­rent ac­count deficits as it catches up on in­vest­ments, par­tic­u­larly on in­fra­struc­ture.

“Lets calm down. We’re on the right track,” Espe­nilla said, re­ject­ing what he termed as ‘fear­based hand wring­ing in some of the cov­er­age’.

(Bloomberg)

Nestor Espe­nilla

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