HOME  ABOUT THE BANK  MONETARY POLICY  BANKING SUPERVISION  PAYMENTS & SETTLEMENTS  STATISTICS  FEEDBACK CORNER
   BSP NOTES & COINS  MONETARY OPERATIONS  LOANS-CREDIT & ASSET MGT  PUBLICATIONS & RESEARCH  REGULATIONS  PROCUREMENT

Feedback Corner

Publications and Research

Media Releases

Peso Depreciation Seen to be Temporary

07.27.2000

“The peso has come under some pressure over the past few days due mainly to weakening sentiment on regional currencies. With no significant change in economic fundamentals, the Monetary Board believes that this is a temporary phenomenon with the peso expected to recover as in the previous episodes of sentiment-driven movements in the peso-dollar rate.”

“Other currencies in the region have been experiencing a decline in value against the US dollar, including the Indonesian rupiah, the Thai baht , and the Singapore dollar. Even currencies of some developed countries have been showing some weakening against the US dollar such as the New Zealand dollar, the Australian dollar, the British pound, and the Euro.  The New Taiwan dollar and the South Korean won, however, have strengthened against the US dollar.” 

Changes in  selected exchange rates    

Currency

 Jan-Jul 27,2000
(change in percent)

Philippine peso

-10.41

Indonesian rupiah

-22.15

Thai baht

-8.77

Japanese yen

-6.15

Singapore dollar

-4.34

New Taiwan dollar

1.04

South Korean won

2.22

New Zealand dollar

-10.99

Australian dollar

-9.54

Euro

-6.35

British pound

-5.97


“The Monetary Board believes that the sound macroeconomic fundamentals favor a stronger peso.  They do not justify the current level of the peso-dollar rate. Economic recovery has been sustained during the first quarter while inflation has remained benign. The banking system remains sound and the external position continues to be robust.”

“The positive performance of export receipts and OFW remittances is forecasted to continue for the rest of the year and this will support a stabilization of the exchange rate.  For the first 5 months of the year, exports grew by 9.7 percent and are predicted to expand by 15.2 percent for the year and reach the US$40 billion level. Remittances by Overseas Filipino Workers (OFWs) for the first three months of 2000 has exceeded US$1.5 billion and is targeted to total more than US$7 billion by year-end.  With the success of military operations against the Moro Islamic Liberation Front (MILF), the Monetary Board also foresee an acceleration in the resolution of the conflict in Mindanao. This should relieve some of the political concerns in the market.”

“Furthermore, favorable developments in the outlook for US Fed policy is seen to further support the view of more stable currencies in the near future.  In a 20 July 2000  Fed’s twice-yearly monetary policy report to the US congress, Alan Greenspan   told lawmakers that softening consumer spending may help bring demand back into line with the economy’s potential to produce. As such, there is less pressure for the US Fed to raise interest rates further. There are expectations that the tightening cycle in the US is about to end, with US interest rates for the remainder of the year remaining at present levels. This should help ease the pressure on currency markets in the Asian region, including the peso.”

“The Monetary Board will continue to monitor closely foreign exchange market developments and will adopt appropriate measures as may be necessary.”

RSS Subscribe for updates

Archives