Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno is not overly worried about the depreciating peso against the US dollar, which is about to breach P50:$1.
“Our defense to the peso right now is our hefty gross international reserves (GIR) and the steady inflow of dollars brought about by various sources like the overseas Filipinos’ remittances, payment for the business process outsourcing and foreign direct investments,” said Diokno during his weekly virtual press briefing.
He said that the peso depreciation, now at P49.87 from a high of P49.91 so far this week, is because of the strength of the US dollar in recent weeks.
“As you can see, almost all major currencies in the world depreciated vis-à-vis the dollar. That means that it is the dollar that is strong, not the peso that is weak,” said Diokno.
The BSP chief also reiterated that they will “continue to pursue the free market solution to our FX (foreign exchange) market. It is determined by supply and demand conditions.”
“We participate in the market only to minimize the fluctuations,” he added.
As of end-May, the GIR is steady at $107.25 billion compared to end-April’s $107.70 billion. As far as BSP is concerned, the GIR remains an “adequate external liquidity buffer”. Diokno said earlier he expects the GIR to reach $120 billion by end-2021 which is $6 billion more than BSP’s forecast of $114 billion.
Last year, the peso closed at P48.02, appreciating by 5.44 percent from its closing rate of P50.64 in December 2019. It is one of the strongest performing currencies in the region for the past several years.