MONETARY authorities will act to prevent peso volatility but will not automatically defend a specific exchange rate level, including the widely watched P60 to the dollar mark.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. told reporters on Friday that the central bank’s approach to the foreign exchange market remained unchanged despite three record lows so far this year.
“We do what we’ve always done. We try to avoid sharp movements in the peso,” he said when asked if the BSP would defend the currency if it threatened to hit P60:$1.
“Just because it’s 60 [to the dollar] doesn’t mean we’ll defend it,” Remolona said. “It depends on how it gets there.”
Intervention is more likely if the peso weakens sharply rather than gradually, he explained.
Asked if the BSP would allow the peso to hit P60:$1 if the movement was not abrupt, Remolona replied, “Probably. It depends on a number of things.”
He also confirmed that BSP officials were present during recent trading sessions when the peso approached the P59.50:$1 level, but also said that reaching P60:$1 would “not [be] soon.”
The peso hit a new record low last Jan. 7, closing at P59.355 to the dollar and then fell further to P59.44 and P59.46 on Jan. 14 and 15, respectively. It also hit a record intraday low of P59.50 on Jan. 20.
The currency has regained ground since then and closed at P59.09:$1 last Friday.
Traders have said the peso’s depreciation was being driven by expectations of a February rate cut by the BSP amid slim chances of a similar move by the Federal Reserve later this week.
Remolona, who has said that the central bank could lower key interest rates one more time, said Friday that “even that cut is still a maybe... it is not yet certain.”
He said the BSP continued to look at the “usual factors,” with keeping inflation under control still the primary mandate.
Low inflation could support easing and the BSP may also consider whether a rate cut could help support economic growth. The US Federal Reserve’s actions remain a consideration but are not a decisive factor, the BSP chief said.
Weaker-than-expected fourth-quarter gross domestic product (GDP) growth could influence policy and the possibility of a rate cut as early as February, he continued.
“If it (growth) would turn out to be weaker than expected, it would help us decide to cut,” Remolona said.
The BSP’s policymaking Monetary Board has trimmed key interest rates by a total of 200 basis points since August 2024 as inflation began slowing. Its first meeting for 2026 will be held on Feb.