BSP may raise rates

The Bangko Sentral ng Pilipinas (BSP) warned Thursday it may raise interest rates to check the rapid depreciation of the local currency.

"The monetary board expressed concern over the recent movement of the exchange rate (and expressed) its willingness to resort to monetary tightening measures should the depreciation of the peso threaten the inflation target," the bank said in a statement.

The peso recovered Thursday to close at 54.950 to the dollar after breaching the psychological 55 level to close at 55.099 to the dollar on Wednesday.

The BSP refrained from taking immediate action on interest rates leaving the overnight borrowing rate at 7.0 percent and the lending rate at 9.25 percent.

The peso has been falling for weeks, partly pulled down by domestic security concerns following a spate of Muslim rebel attack and bombings in the country’s troubled south.

Currency analysts had widely expected the central bank to raise rates to help stop the fall of the peso.

President Arroyo and other officials on Wednesday had warned that the government would take action against speculators who they partly blame for the peso’s depreciation. – AFP