PESO TO REMAIN STABLE TILL YEAR-END–DIOKNO
THE local currency is seen to remain stable for the rest of the year on the back of ample international reserves and manageable inflation, the Bangko Sentral ng Pilipinas (BSP) said.
BSP Governor Benjamin E. Diokno said in a briefing on Wednesday that the peso has remained robust, outperforming other regional currencies.
As of September 4, Diokno said the peso has appreciated against the greenback by 4.14 percent to P48.62 from the end-december 2019 closing of P50.64.
Following the peso are the Japanese yen, Taiwan dollar and Chinese yuan, which grew by 2.32 percent, 2.25 percent and 1.84 percent, respectively, during the same period. Meanwhile, Malaysian ringgit, Singaporean dollar, Indian rupee, South Korean won, Thai baht and Indonesian rupiah declined.
“[The] country’s manageable inflation environment, a high level of international reserve buffer and favorable market sentiment, even the passage of Bayanihan II, continue to provide support to the peso,” Diokno said.
Year-to-date, headline inflation stood at 2.5 percent, which is within the government’s target band of 2 percent to 4 percent. The BSP said it is projecting inflation to settle within 1.75 percent to 2.75 percent this year.
Gross international reserves, meanwhile, rose by $4.52 billion to an all-time high of $98 billion as of end-july from $93.47 billion in the previous month. The growth was attributed to revaluation gains from the BSP’S gold holdings, the national government’s foreign currency deposits and earnings from foreign investments.
The current dollar reserves level can cover 8.9 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 7.5 times of short-term external debt based on original maturity and 4.9 times based on residual maturity.
“The stability in the peso-dollar market has been supported by ample gross international reserves and favorable external debt position,” Diokno added.
The BSP chief said that the external debt-to-gdp (gross domestic product) ratio has declined to 21.4 percent in the first quarter this year.
“This external debt level has provided the government sufficient space for higher budget deficit needed as it responds to the ongoing crisis through aggressive fiscal stimulus,” he said.
In 2020, the BSP projects the peso to trade within the P50 to P52 range. The local currency is seen to move within P50 to P54 level next year.
The Philippine peso lost 10 centavos to close at P48.66 on Wednesday from P48.56 the previous day, according to data from the Bankers Association of the Philippines.