The Bangko Sentral ng Pilipinas (BSP) warned of short-run volatilities seen generated by sentiment arising from the recently published Federal Open Market Committee (FOMC) meeting minutes indicating against an interest-rate adjustment this year. Senior officials, however, quickly gave assurance the Philippines is well-positioned to handle any fallout from such a decision.
“Pressure for safe haven search by foreign capital would likely lead us to seeing short-run volatilities in the foreign-exchange and equity markets; the bond markets would also react,” Deputy BSP Governor for the Monetary Stability Sector Diwa C. Guinigundo said.
Guinigundo brushed aside whatever potentially disruptive and lingering impact the Federal Reserve decision to stay the course a long while still, saying such has been part of an eventuality that had long been anticipated by a large segment of the global financial markets.
“Those with large external exposure would be most concerned because of foreign exchange and credit risks,” he quickly observed.
On Friday the local currency closed the trading week on a strong note as it gained back 2.4 centavos to 45.87 per dollar from Thursday’s rate of 46.11 per dollar. The peso trended up the entire week. The total traded volume stood at $1.049 billion.
Guinigundo also said the Philippines should remain firmly on track to hit its price and growth targets no matter the volatility that some have anticipated to result from the US Fed interest- rate adjustment.
“Through all these happenings, the Philippines remains well positioned with its growth prospects and ample external space courtesy of comfortable foreign reserves, current-account surplus and declining external debt to GDP ratios,” Guinigundo said.
“Domestic liquidity continues to support economic activity and fund-raising exercises,” he said.
“Investors should also realize that the other side of the Fed lift [episode] is not as dark. It means that the US growth is improving and with it, everybody is lifted up especially with respect to higher exports, services and investments,” he quickly added.