The local currency the peso proved one of the more stable currencies no matter the problems hounding China’s equities market and the debt problems faced by Greece with respect to its creditors.
Data from the central bank show that the peso posted a volatility of only 0.77 percent this year, significantly lower than the volatility print averaging 1.27 percent in 2014.
Also, data show that the peso is the second least volatile among the currencies monitored by the Bangko Sentral ng Pilipinas (BSP), next only to the Chinese yuan or renminbi—which posted a volatility rate of 0.37 percent this year.
Among the top volatile currencies include the New Zealand dollar, Swiss franc, euro, the Australian dollar and the Indonesian rupiah.
Among the more stable currencies, aside from the peso and China’s renminbi, are the Singaporean dollar, the Indian rupee and the new Taiwan dollar.
At the sidelines of the annual BSP Stakeholders Awards ceremony, BSP Governor Amando M. Tetangco Jr. said market players now focus on when the US Federal Reserve (the Fed) would begin to normalize its interest rate and impose a hike as countermeasure to an increasingly robust economy.
“This morning we’ve seen a strong dollar and the other side of that, there’s some weakening of regional currencies, including the peso. Because of the strength of the US dollar this morning, given that people are again expecting that the Fed will increase interest rates sometime this year, the dominant view is that, perhaps, this September,” the governor said.
However, Tetangco said Greece should remain up there among the many variables, as he vowed the BSP will continue to monitor developments in the European Union and make the necessary policy adjustments as and when necessary.
“There still a lot that needs to be done. The agreement, of course, is a very positive step, but the different governments in Europe will have to have these passed by their respective parliaments, especially Greece. We’ll have to see what will come out in all of this,” Tetangco said.
On Monday Greece finally reached an agreement acceptable to the European Commission, the European Central Bank and the International Monetary Fund on how the embattled Mediterranean nation would pay back its creditors based on an outline acceptable to the creditors.
The gyrations of the peso, according to Tetangco, indicate that foreign capital has not flown out but has, instead, opted to stay in the Philippines.
“There’s no major change. There’s some weakening today, then some recovery tomorrow. That meant
that the movements are within range. There’s no blowup in terms of the exchange rates in the peso, as well as the exchange rates in the rest of the region. They should, to me, indicate that the funds are not moving out of these countries or economies on the big way. There may be some declines in stock markets. But the funds, I would say, tend to stay within the country, waiting for opportunities,” Tetangco said.