MANILA, Philippines - The peso recovered yesterday from a three-day losing streak but remained above the 46 to $1 level as currencies in the region continued to weaken after the Chinese central bank devalued the yuan.
The peso gained 11 centavos to close at 46.15 yesterday from Wednesday’s 46.26.
Bangko Sentral ng Pilipinas Governor Amando Tetangco said currencies in the region are expected to continue to trade on the soft side, taking cues from the Chinese yuan as well as data coming out of the US.
Another factor, he said, is the development in the debt crisis in Greece.
“As I have explained before, the exchange rate almost always is the first to domestically reflect volatility in global markets. Hence, as is our policy, the BSP, while maintaining essentially a market-determined exchange rate, will be present in the market to rein in excessive volatility,” Tetangco said
Traders said the BSP intervened in the foreign exchange market to smoothen the movement of the peso against the greenback.
BSP Deputy Governor Diwa Guinigundo pointed out the financial markets are still digesting developments in the region particularly the decision of the People’s Bank of China (PBOC) to devalue the yuan.
“The market is still digesting what is happening in the market,” he said.
Guinigundo reiterated that the BSP’s mandate is to smoothen the volatility in the movement of the peso and ensure that there is orderly trading in the market.
“The BSP has no preference. The exchange rate remains flexible and market determined. Again the BSP is in the market only to ensure that those volatilities are kept on minimum,” he said.
He said the peso is one of the least-depreciated currencies in the region since the Chinese central bank allowed the devaluation of the yuan.