These steps include intervention in the foreign exchange market, sticking to the P145-billion budget deficit target for 2001, accelerating the government’s overseas borrowings to bring in dollars, and expanding the BSP’s non-deliverable forward facility.
BSP Governor Rafael B. Buenaventura said the BSP will also be more strict in implementing its foreign exchange regulations and monitor banks’ compliance more closely.
"We’re reminding the banks that if we see that they are doing it (buying dollars more than their requirements) on purpose, we will not just put monetary fines on them, we might suspend them too," he said.
"The Department of Finance and the Bangko Sentral ng Pilipinas are implementing measures to prop up the peso, they should already stop speculating," National Treasurer Sergio Edeza said.
Part of the measures to prop up the peso was the DOF’s decision to increase the size of its planned global offering by $300 million to $800 million.
Finance Secretary Jose Isidro Camacho said the government already registered with the US Securities and Exchange Commission the additional amount to be floated in the debt market.
"We have filed with the US SEC for an $800-million offering and we will push through with the borrowing as soon as possible," Camacho said.
Camacho warned against those who continue to speculate on the peso. "If I were them, I would be circumspect about it," adding that in the last few days, "there are mischievous minds that have been speculating on the local currency."
He said the peso’s weakness does not reflect the economic fundamentals in the country which he stressed remains stable.
Aside from the $800-million bond offering, Edeza said the government also expects between $100 and $200 million from a currency swap being arranged with the Hongkong and Shanghai Bangking Corp. (HSBC).
"The pricing of the loan will be known next week and we can expect to draw from the loan facility by Aug.1," Edeza said.
At the Philippine Dealing System (PDS), the peso opened strong at 53 to $1, to end the day with an average rate of 53.224 to the dollar. The volume turnover was high at $154.80 million.
Currency traders said the BSP flooded the market with about $100 million in a bid to prop up the peso, coursing it through the Deutsche Bank and Standard Chartered Bank.
"The BSP is forcing it down, otherwise the peso could have continued its skid," one trader from a foreign bank, said.