The peso has been on a steady rise since the beginning of the year, sending the exchange rate to its highest level in three years due to strong dollar inflows from portfolio investments, overseas Filipino workers remittances and export earnings.
According to the BSP, however, the prevailing exchange rate was clearly market-determined and there was no indication that the BSP would have to take action at any point while the market was the primary determinant.
"This is a market-determined exchange rate, we’re not in the position to say whether it is under or overvalued" said BSP Governor Amando M. Tetangco Jr.
"Under these circumstances, the BSP need not do anything," Tetangco said. "Our mandate is clear–it is to make sure that the movement of the peso happens in an orderly fashion."
Newly elected European Chamber of Commerce of the Philippines (ECCP) president Emilio Vicens said a firmer peso has its downside especially for companies that rely on markets outside the country.
"There are positives and negatives on a strong peso. The stronger the peso, the tougher it will be for companies to export," Vicens said.
Vicens said the ECCP is after a properly priced peso that reflects the competitiveness of the country as a whole and the value of the Philippines as an investment destination.
The peso closed 11.50 centavos lower yesterday at 51.765 from 51.650 to $1 on Tuesday.
Department of Finance Secretary Margarito Teves earlier said that the government is not going to peg the peso and will let market forces dictate its true value.
"We cannot and should not tell you the competitive exchange rate of the peso," Teves said.
Exporters have been pressing the BSP to act on the continued appreciation of the peso but Tetangco said there was little for the central bank to do especially since the volatility rate has been remarkably low.
"Our job is to smoothen the movement of the peso, whether up or down," Tetangco said. "But we haven’t seen the need to do that because so far, the movement has been smooth already."