‘Flash’ crash no effect on peso

We would like to highlight that the source feed is not Bloomberg nor the Bankers Association of the Philippines. The official sources are Bloomberg and BAP only

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno expressed doubts that any transactions materialized after an apparent glitch that resulted to the so-called currency flash crash on Tuesday.

Diokno explained the abrupt appreciation of the local unit, wherein the peso strengthened from P50.54 to P42.82 per dollar on 20 July 2021, could have been a “pricing feed error.”

“We would like to highlight that the source feed is not Bloomberg nor the Bankers Association of the Philippines (BAP). The official sources are Bloomberg and BAP only,” Diokno told reporters in a viber message.

“We believe that these applications that showed the drastic change in the dollar-peso rate had an error in its source feed,” he added.

“The abrupt peso appreciation yesterday was captured by the currency quotes from Google as well as certain social media platform,” Diokno clarified.

Holiday surprise

Still, the BSP chief stressed that domestic markets were shut on Tuesday in observance of Eidul Adha in the country, which means that there were no live official data sources for the spot market during the holiday.

“The rule that we have is that on holidays the prevailing official rate will be the rate of the previous business day. In addition, we had observed various foreign exchange platforms such as Bloomberg and Reuters (which is what the BSP uses for market data sources) and none showed this drastic move,” he explained.

“Moreover, we highly doubt that there were any material transactions dealt at those rates as these would definitely be off market and would be subjected to internal reviews of these platforms,” he added.

Joey Salceda, House Ways and Means chairperson, earlier sought the central bank to look into the possibility of a flash crash in the currency pair as some retail traders were able to buy and sell dollars at the alleged rate.

The BAP reported the local unit to close at 50.35 against the greenback on Wednesday.

CHINA DAILY DEGREE and pace of the country’s recovery are subject to uncertainties related to the coronavirus pandemic, as well as the progress on vaccination, according to Moody’s Investors Service.