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“I personally believe we must be a little bit more aggressive in increasing rates because I think the economy can withstand it,” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said when asked about another round of increasing key policy rates to manage inflation and the peso’s continued decline.
From ₱50 in November 2021, the peso continued its decline versus the dollar, hitting an all-time low of ₱59 versus the greenback last month.
Still, Medalla attributed to the economy’s expansion in the first half of 2022 as a good sign. In a report from Reuters, Medalla said it will not be “the end of the world” if the Philippine Peso hits 61 versus the dollar.
Medalla did say in a banking forum that the government will do everything it can to make sure the peso does not breach ₱60 to $1.
The BSP did bring some good news last month, stating that personal remittances from Overseas Filipinos have increased by 4.4% in August 2022 versus the same time as the previous year. This meant remittances inflow to the country increased to $3.02 billion (about ₱178 trillion) vs the previous year’s $2.89 million (approximately ₱170 billion).
However, foreign direct investments (FDI) dropped to their lowest in July 2022, reaching only $460 million (approximately ₱26 trillion). In the previous year’s July, that amount was $1.3 billion (approximately ₱75 trillion).
The BSP previously called for companies to make sure they buy dollars from legitimate sources only. “We ask those who have the means not to take undue advantage of changing market conditions. This does not help the Philippine peso; it does not help the Philippines. What we can do is to bring all transactions into an organized and accessible formal market that offers consumer protection,” Medalla said.
The peso closed at 57.97 to the dollar last October 28 based on data from the Bankers Association of the Philippines (BAP).
Previously, Albay 2nd District Representative Joey Salceda said there might be no resistance in the event that the peso breaches ₱60 to the dollar. “There is no resistance. There is no anchor, so to speak. So, I can see the dollar sustaining its strength against the Peso. It will continue. This could go as high as P65 to P68 per dollar. And, frankly, there’s not much we can do,” he said.
This article is published on BitPinas: BSP – Not End of the World if Peso Hits 61 to a Dollar
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