The peso has regained enough strength to appreciate past P58 to P57.99 vis-à-vis the US dollar on Wednesday, Nov. 9 as a softer greenback allowed some currencies in the region to rally.
The local currency slightly improved by P0.285 to close at P57.99 versus the previous P58.275. It was strong during the day with an intraday level of P58.22 while it also appreciated to P57.9.
Despite the Bangko Sentral ng Pilipinas (BSP) intervention in the spot market since July and with more intensity in September, the peso broke the P59 level five times in September and October but did not depreciate further past this level.
The peso’s lowest rate is still P59 which it touched for the first time on Sept. 29. Since its P50.99 closing rate as of end-2021, the peso has lost P7 or 13.73 percent.
To stabilize exchange rate trading, BSP Governor Felipe M. Medalla has had to calm the markets and to assure traders and investors that the Monetary Board which he chairs, will match US Federal Reserve rate hikes until the country’s inflation environment returns to manageable levels.
Last Nov. 4, in a Bloomberg TV interview, Medalla said he will not “draw a line in the sand” as far as the peso level is concerned, but will continue to support the exchange rate with BSP’s US dollar reserves.
“We don’t want to be selling too much dollars so the best way to do that is make the markets know in advance what we will do,” he said.
Medalla has announced that the BSP will raise its policy rate by another 75 basis points (bps) on Nov. 17, from 4.25 percent to five percent.
Medalla said the local currency and inflation are two critical issues the BSP are managing to be able to support growth amid these volatility and price pressures.