BSP to remain in FX market as peso rises
MANILA (UPDATE) - The Philippine central bank said on Thursday it would keep intervening in the market to manage wild swings as the peso jumped nearly 1 percent following the U.S. Federal Reserve's decision to maintain its bond-buying stimulus programme.
Monetary authorities are also watching for potential risks in asset markets, although there are enough macroprudential tools in place to address capital inflow surges, said Bangko Sentral ng Pilipinas (BSP) governor Amando Tetangco.
"The BSP will maintain a presence in the FX market if, in our assessment, there is excessive exuberance in the financial markets, especially today because of the unexpected Fed announcement," Tetangco told reporters in a mobile text message.
Foreign exchange authorities in some Asian countries, such as South Korea and Taiwan, have been seen intervening to slow the appreciation of their currencies.
The peso gained 1.1 percent to 43.05 against the greenback, its strongest since July 1, on demand from offshore funds.
But it also pared initial gains as the central bank was suspected of buying dollars to stem its upside, along with its governor's comments, traders said.
"It should because we are lagging the other currencies in the region," said a Philippine bank trader in Manila, when asked if the peso would strengthen further.
The peso may head to 42.93, the trader expected.
"But if the central bank doesn't stop buying dollars, then we will just remain stuck here."