'Peso gains should be tempered by BSP'
MANILA, Philippines - The central bank should consider putting measures to temper the fast appreciation of the peso, a banker said, as the local currency remains greatly affected by a surge in capital inflows to the country.
"There should be other measures done to be able to counteract or at least slow down the fast appreciation of the peso," Ronald Avante, president of the Philippine Business Bank, said in an interview with ANC's News Now on Tuesday.
But Avante said that factors why the Bangko Sentral ng Pilipinas may opt not to do so include foreseen reduction in capital inflows to the country.
"The (BSP) Governor stated before that they don't want to put something of that sort because that can also dampen the interest of investors coming in," Avante said.
"It will definitely also cut capital inflows especially for projects the government needs for infrastructure," he continued.
Avante made the comments after BSP Governor Amando M. Tetangco, Jr. on Tuesday said reducing key policy rates is not enough to address surge in capital inflows. Tetangco has said the central bank will need to be "creative" in order to find what "appropriate tool" is needed.
The peso closed P41.275 against the dollar on Monday, already far from its P43.84 finish against the greenback in end-2011.
"We've seen how steadily the peso has appreciated despite what is happening globally and I think this will continue given the fundamental reasons for the strength of the peso," Avante said.
Avante noted more capital inflows may continue to be seen by the country amid its strong macroeconomic fundamentals.
The BSP last week cut key policy rates to a record low of 3.5% for overnight borrowing and 5.5% for overnight lending, meant to help manage capital inflows that continue to affect the local currency and to provide a cushion for the economy against global headwinds.