BSP exec traces Philippine peso weakness to external factors

MANILA, June 28 -- A ranking Bangko Sentral ng Pilipinas (BSP) official said Wednesday’s depreciation of the Philippine peso against the US dollar was caused by developments overseas.

”(It was) mostly externally driven,” BSP Deputy Governor Diwa Guinigundo told reporters in a text message.

The local currency finished the day at 50.50 to a greenback, Php0.21 weaker than its 50.29 finish Tuesday.

Guinigundo said among the factors that was a negative to the peso included expectations that the US Congress would not fast-track the Trump administration’s tax measures and fiscal spending.

He said this was a “negative to market sentiment.”

The International Monetary Fund (IMF) decision to slash its growth outlook for the U.S. economy this 2017 from 2.3 percent to 2.1 percent on account of lack of any aid from the proposed tax cuts and increase in infrastructure spending, which are pending in Congress, was another risk-off factor, he said.

IMF also cut its 2018 growth forecast for the US from 2.5 percent to 2.1 percent.

Guinigundo said the cut of IMF’s growth outlook for the world’s largest economy during the two-year period “could affect the outlook for emerging markets including the Philippines.”

“Hence, regional currencies depreciated across the board,” he said.

“Finally, it's quarter and semester end and banks are servicing FX (foreign exchange) requirements of their corporate clients. (Demand for dollars is) Heavier than usual,” he added. (Joann Santiago/PNA)

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