Forex
Home›Forex›EM Currencies›Philippine peso holds near record low as BSP weighs co…
Philippine peso holds near record low as BSP weighs costly intervention
The peso has largely traded around its all-time low of 61.75 per dollar since April 30, while BSP reserves have fallen more than 5% this year.
The Philippine peso has been stabilizing near its record low, with most trading over the past nearly three months clustered around an all-time low of 61.75 per US dollar first reached on April 30. The currency touched 61.75 on 10 more occasions since then, including three times this week, as traders look to levels that could trigger stronger central bank action.
Bangko Sentral ng Pilipinas has supported the peso through dollar sales, but pressure has been building as crude extends gains and the stronger US dollar weighs on Asian currencies. Strategist Wee Khoon Chong at BNY in Singapore said it is becoming increasingly difficult and costly for the BSP to maintain a specific level, warning that it could strain foreign exchange reserves that have already declined this year.
The BSP intervened this week by selling dollars as US-Iran hostilities escalated, and other central banks have also acted to support regional currencies, according to the report. BSP Governor Eli Remolina said in June that the central bank generally allows the peso to find its own level based on market forces, though intervention can be expensive.
The article notes that BSP has drained billions of dollars from reserves, which have fallen more than 5% this year, while Indonesia’s reserves have dropped about $10 billion this year. A Bloomberg survey forecasts the peso will be largely steady by the end of this quarter, with some strategists seeing a chance the BSP can hold the line in the short term if oil and the dollar do not worsen further.
Latest closeWTI crude $87.52 ▲3.1%