BSP says its less hawkish stance may put pressure on peso

May 17, 2024 - 9:39 AM
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Philippine peso bills
A man counting Philippine peso. (The STAR/KJ Rosales)

(Updated, 11:29 a.m.)  MANILA — The Philippine central bank’s less hawkish stance may put pressure on the peso but that has not happened yet, its governor said on Friday.

Bangko Sentral ng Pilipinas Governor Eli Remolona told Bloomberg TV on Friday the central bank is “happy” with the movement of the currency, but it has been intervening in small amounts keep markets orderly.

The BSP kept rates steady for a fifth straight meeting on Thursday, but signalled it could cut interest rates as early as August given recent inflation and economic growth numbers.

Remolona said he would like to reduce reserve requirements for banks “by quite a bit”, but it would not necessarily be in tandem with a rate cut. He said the BSP could reduce the requirement to 5% from 9.5%, one of the highest in the region.

“The timing is important. We don’t want to do it while we’re still hawkish,” Remolona said.

Remolona added the country’s ongoing maritime tensions with China in the South China Sea has not affected the peso.

Annual inflation quickened for a third straight month in April to 3.8%, bringing the average to 3.4% in the first four months, within the central bank’s 2% to 4% target for 2024.

— Reporting by Mikhail Flores and Karen Lema; Editing by John Mair