Since the peso’s depreciation was seen at the onset of Israel’s attack on Iran, the local currency continued losing strength against the United States (US) dollar.

On Thursday, June 19, the local currency, shedding nearly half a peso, closed at ₱57.45 from ₱56.98 last Wednesday. The closing rate was also the peso’s intraday low.

It reached an intraday high of ₱57.1 after opening at the same level, according to the Bankers Association of the Philippines (BAP).

Total trading volume inched up to $1.834 billion from Tuesday's $1.266 billion.

“Usually when the peso depreciates or seems to depreciate, for reasons that are really about the strong dollar,” Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr. told a press briefing on Thursday after the policy-setting Monetary Board (MB) lowered key interest rates by 25 basis points (bps).

Remolona cited how the peso and other currencies lost footing against the US dollar.

“In the last few days, we saw the dollar strengthen because of global tensions, so safe haven flows into the dollar,” he said.

“To intervene strongly, just to maintain the exchange rate of the peso to the dollar would be futile,” Remolona asserted.

“We won’t have enough reserves to do that. So we would intervene just for regular liquidity reasons,” the central bank chief explained.

If the peso continues to depreciate, Remolona said the central bank would have to intervene “more seriously,” considering that the pass-through effect of peso depreciation “has come back to haunt us.“

According to Remolona, the pass-through now—a massive decline in peso that leads to inflation—is “very different from before.”

For now, the BSP Governor “does not see any reason” to intervene amid the peso slide, as he argued that moderate depreciations have no effect on the inflation environment.

“When they’re big enough, it usually takes a few weeks of continuous depreciation. Then we might intervene,” he concluded.