MANILA, Philippines - Despite the steady depreciation of the peso against the dollar, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said the peso has been the least volatile currency in the region.
Tetangco expressed confidence that the peso would do fine with the exchange rate left up to the market, necessitating only an occasional move to smoothen sharp fluctuations.
Compared with other currencies in the region, Tetangco said the peso actually managed to stay steady, depreciating by only 1.55 percent as of yesterday.
Tetangco said this depreciation is slightly better than that of the Thai baht which depreciated by 1.84 percent. The least depreciated currency in the region is the Chinese yuan which fell only 0.02 percent over the same period. The worst performing currency has been the Korean won which fell 9.85 percent.
Tetangco said the peso’s volatility rate from January up to yesterday morning was recorded at 1.36 percent compared with 1.38 percent of the Thai baht.
The Chinese yuan had a volatility rate of 0.08 percent while the country’s other competitors in the region were slightly higher than the peso. The Malaysian ringgit had a volatility rate of 1.87 percent and the Indonesia rupiah had a rate of 3.51 percent.
Tetangco said preventing the peso from swinging dramatically either way is important in providing a stable operating environment for businesses that plan ahead based on what they expect the foreign exchange rate would be.
If businessmen could be assured that the peso would not be volatile, Tetangco said they would have more leeway in laying out their plans ahead of time and uncertainty would be reduced across the board.
A number of central banks especially in Europe have taken unconventional steps to prevent their economies from slipping into recession. Some have gone to the point of allowing their currencies to weaken.
Tetangco has repeatedly said the country’s foreign exchange rate would remain market-determined, saying that pegging the peso at any particular level was not an option under consideration by the BSP.
Last week, Tetangco said the BSP would manage the volatility of the peso although he admitted the currency did react to external developments. “But we are at the lower end of the volatility range and it is manageable,” he said.
Tetangco said the peso will remain market-determined in the Philippines, despite the growing tendency of other central banks to intervene in the currency market.