Peso breaks P53:$1

The peso on Friday, June 10, depreciated to a 42-month low of P53 versus the US dollar, it closed on its intraday high from Thursday’s P52.95.

The lowest close from Friday was on Dec. 20, 2018 when the exchange rate was at P53.10. The peak in intraday level was Jan. 22, 2019 at P53.04.

The spot volume was higher at $949.3 million from $732.62 million on Thursday, based on Bankers Association of the Philippines data.

The Bangko Sentral ng Pilipinas (BSP) and the market has been expecting the peso to depreciate further and to break P53 due to a strong US dollar and a surge in import demand.

The peso has depreciated by 3.94 percent vis-à-vis the US dollar from end-2021 level of P50.99.

The BSP said it will keep its market-determined exchange-rate policy and that they will only intervene “to ensure orderly market conditions and to prevent excessive short-term volatility in the exchange rate.”

BSP officials have been concerned but prepared by global spillovers and its impact on the economy and the exchange rate. They are closely monitoring developments in the global and local oil market, the quantitative tightening by the US Federal Reserve, Ukraine-Russia conflict, and domestic inflation.

The central bank has been taking actions since January to relieve foreign exchange rate pressures.

BSP Governor Benjamin E. Diokno has stressed earlier that they will stick to a flexible exchange rate arrangement which is “an automatic stabilizer in the face of external shocks.”

Diokno said a market-determined exchange rate has the benefit of reducing the negative impact of external shocks as a floating exchange rate can appreciate or depreciate immediately to stabilize the country’s balance of payments.

When the BSP intervenes in the peso-US dollar spot market, it releases foreign currency to relieve the pressure off the peso.

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