The Bangko Sentral ng Pilipinas (BSP) dismissed calls from some sectors urging monetary authorities to have a fixed peso-dollar rate so he local currency will cease from strengthening further against the dollar.
“It will distort the local currency. You will just create black markets because the people know that is not the real value of the dollar,” deputy governor for monetary stability sector Diwa Guinigundo told the Daily Tribune from Hokkaido, Japan.
Calls for a fixed peso-dollar rate came from several lawmakers a decade ago. Last week, former National Treasurer Leonor Briones suggested that the peso be stabilized to P43 so OFWs and their families will not be disadvantaged.
BIC Investment and Capital Corp. agreed with the BSP, saying the peso-dollar exchange rate is market driven so there’s no way that it can be controlled whether in favor or against the local currency.
“What is clear in this scenario is the fundamentals of the Philippines are working for the better,” said the firm’s chief executive officer and president Renato Diaz.
BIC is one of the leading intermediaries in the country. Diaz, author of the comprehensive tax reform program law — build-operate-transfer law — when he was still congressman of Nueva Ecija’s 1st district, said it is very fortunate that the country is not suffering from crisis like many countries in Europe and the US.
Like the BSP, the banker said a strong peso is unwelcome to OFWs and their families as well as exporters because they want a weak local currency in order for their money to have higher value.
OFWs send a monthly average of $10 billion dollars to the country while the income of exporters constitutes the biggest chunk of the Philippines’ balance of payments.
The peso registered its strongest position against the greenbuck last July 13 at P41.64-$1.
The BSP sees no reason that the local currency will weaken because of stable export growth, capital flows and continuing increase in dollar remittances from overseas Filipino workers.
Guinigundo said the peso could have strengthened further had the BSP declined to participate in the market.
He refused to divulge how much worth of dollars the BSP bought to keep the local currency from further strengthening.
Guinigundo also said if the $77.6 billion international reserves would be used to buy all excess dollars in the market, the reserves can only last for five days.