The Bangko Sentral ng Pilipinas (BSP) vowed on Monday to maintain a presence in the foreign-exchange market, as the peso weakened to as low as 45 per dollar at one point during trading.
In a statement released late Monday, BSP Governor Amando M. Tetangco Jr. said the day’s fluctuations were on account of “two-way flows,” when foreign currency flowed inward in the form of investments or loan proceeds, but flowed out, as well, when these were also repatriated.
Data from the Philippine Dealings System Holdings Corp. (PDS) showed the peso closing at 44.9 per dollar on Monday’s $411.9-million trades. This was 2 centavos weaker than the previous day’s close of 44.88 per dollar.
The local currency started the day at 44.96, and traded to as weak as 45 per dollar and to as strong as 44.89 at one point.
“Initially, the peso’s weakness was in line with the US dollar strength, which was still in reaction to the Bank of Japan’s move last Friday. Some corporate dollar receipts and equity-related inflows during the day, however, helped the peso recover a bit toward the close,” Tetangco said in a text message to reporters.
On Friday Japan’s central bank stepped up its bond purchases as part of its monetary stimulus program to help push inflation higher to avoid a deflation spiral when prices fall and consumers postpone purchases that fuel growth.
The peso had been testing the 45-territory since last month as markets react to US growth getting more traction. The central bank vowed to take necessary actions if necessary.
“We will keep a presence in the market as appropriate to help avoid excessive volatility,” Tetangco said.