Philippine central bank ‘very active’ in FX market: Governor

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Higher interest rates, intervention in the currency market and sterilization should be sufficient to cushion the economy against risks, the BSP chief said.

The monetary authority, which has raised the policy rate by a total of 2.25 percentage points, makes its decisions in relation to inflation, Medalla told reporters in Manila on Friday. It considers the exchange rate to the extent that it aggravates imported inflation, and any response to Federal Reserve depends on how much the latter would hike, he added.

Separately in his speech, he repeated plans to increase central bank’s debt issuance to trim the supply of peso liquidity that can be used to buy more dollars in the market, saying it’s a “more permanent form of sterilization.” The central bank has been conducting some swaps and other market operations, and can also sell dollar forwards, he said.

He also urged the public to keep foreign currency transactions within the banking system, Medalla said, warning that doing otherwise will widen the differential between the official spot rate and the gray market.

 

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Philippine Central Bank ‘very active’ in FX market: Governor - BusinessMirrorThe Philippine central bank has been “very active” in the foreign exchange market to curb excessive volatility and stem the peso’s depreciation, Governor Felipe Medalla said. The monetary authority, which has raised the policy rate by a total of 2.25 percentage points, makes its decisions in relation to inflation, Medalla told reporters in Manila on
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