MANILA – The Philippine peso again closed to its fresh 11-year low to a US dollar Friday but Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. said strong macroeconomic fundamentals will continue to support the local currency.
He said the local unit is “market determined”, meaning it is the market players and not the central bank that define the foreign exchange in the country.
“It will move up then down. It will not free fall, it will take care of itself because the economic fundamentals are strong,” he told journalists at the sidelines of initial On Q: FinTech Thought Leadership Roundtable Series of FINTQ, the Financial Technology arm of Voyager Innovations, in Mandaluyong City.
Traders have attributed the weakness of the peso on Friday to the terror attack at around 5 p.m. in Barcelona, Spain, where 13 people died and at least 100 others were hurt.
This after a van rammed into a crowd of people on Las Ramblas, one of Barcelona’s popular areas.
Police were able to prevent another attack in Cambrils, south of Barcelona, where police shot dead five suspected terrorists.
Earlier, Espenilla said the latest weakness of the local currency was partly due to the drop of the country’s current account to deficit levels on account of rising importation, which in turn was due to rising requirements of the domestic economy.
Gross domestic product (GDP) grew 6.4 percent the first half of the year, almost near the lower end of the government’s 6.5-7.5 percent growth target for the year.
In the second quarter alone, GDP rose to 6.5 percent from quarter-ago’s 6.4 percent due to strong rise of the industry sector, at 7.3 percent.
The agriculture sector also fuelled growth after rising by 6.3 percent, a reversal from its two percent decline a year ago.
Services expanded by 6.1 percent, slower than its 8.2 percent rise same period in 2016.
Year-ago GDP was higher at 7.1 percent.