All eyes and ears were on Bangko Sentral ng Pilipinas (BSP) yesterday as the monetary authorities refused to pull the trigger on the key interest rate, veering away from the move of the US Federal Reserve.
At the moment, the BSP is in a relatively and equally difficult situation with the value of the local currency dipping slightly against the US dollar along with the continuous increase in the prices of petroleum products and other basic commodities.
As the fulcrum that binds the economy, the BSP did a calibrated preemptive response or move to perk up domestic activities in order to maximize the economic growth potential by keeping on an even keel its key interest rate policy.
This is anchored on the expectation by both the monetary authorities and market practitioners that inflation will steadily decline, given the July figure of 4.7 percent, which was the lowest in five months.
The market narrative says the upward spiral in inflation is almost at the end, although, market players acknowledged along with the BSP that the continuing war between Ukraine and Russia and the weather phenomenon, El Nino, are the drags that could fan inflation.
Comparatively, however, there seems to be a clearer vision on inflation trajectory now, but we’re still not yet out of the woods. Yes, it’s a bit sunny but there’s nimbus clouds hovering, carrying “upside risks” that include “additional transport fare hikes, higher wage adjustments, food supply constraints.”
Aside from these upside risks, there’s also a downside risk: the projection of a slowdown in the global economy, which was among the highlights of Gov. Eli Remolona’s presentation before the House of Representatives last week.
And rightly so as the New York Times quoted Nomura investment analyst the “Chinese economy is faced with an imminent downward spiral with the worst yet to come.”
Despite the ongoing heated altercation we have on the South China Sea, China is one of the country’s biggest trading partners. The “geopolitical and trade tensions” strain the country’s growth potential.
For now, the BSP is in the “rock and hard place” as it has to stave off inflation to keep the local currency from wildy gyrating. While the peso dipped to P57 to the green, most of the currency traders and market analysts believed it’s not largely due to the effect of the 18 percent devaluation of the Argentinian peso.
So far, the impact of this negative offshore development has not reached the country’s financial shore unlike in the past decades, notably the 1994 Tequila crisis with investors herding Philippines with Mexico.
Now for other developments in the business community, heard that former Finance Secretary Carlos G. Dominguez now sits in the board of GT Capital Holdings, Inc., a listed firm owned by the Ty-family involved in banking through Metrobank, automotive through Toyota Motors, property through Federal Land, infrastructure through Metro Pacific Investment Corp., insurance through AXA, and motorcycle financing through Sumisho.
Speaking of Toyota, the Ty-family has yet to announce the replacement of former Customs/Internal Revenue Commissioner Guillermo “Willy” Parayno, who passed on early this month. Com. Willy sits on the board of Toyota, which is celebrating its 40th anniversary.
Another positive market update is the “knight in shining armor” of Dennis Uy firm, DITO CME Holdings Corp. The Davao-based Mr. Dennis has successfully invited Singaporean venture-capital firm to purchase 10 percent equity, worth roughly P1.6 billion, in the country’s third internet player.
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