The Philippine central bank is committed to curbing significant fluctuations in the peso, particularly if the currency weakens, according to Governor Eli Remolona. In an interview on Wednesday, Remolona emphasized that sharp depreciation could fuel inflation, a concern the bank aims to mitigate.
“A big swing toward the direction of depreciation tends to be inflationary,” Remolona stated. “So we worry about that, and we have to somehow resist that.”
The Bangko Sentral ng Pilipinas (BSP) has already intervened to reduce one-month peso volatility, which had surged to a four-year high in November. Despite this, emerging markets are facing heightened instability, with political uncertainties in Turkey and Indonesia contributing to volatility in their financial markets. As a result, central banks in these nations remain vigilant, with market sentiment becoming increasingly fragile.
Remolona warned that further volatility could emerge if the U.S. dollar strengthens, potentially pushing the peso back toward its December record-low of 59 against the dollar.
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