ASEAN KEY DESTINATIONS
Philippines considers foreign exchange changes
"The issue is that we are seeing strong inflows of capital, and definitely this will have some impact on macroeconomic variables," BSP Deputy Governor Diwa Guinigundo said.
He said it is possible that liquidity would increase, as more foreign exchange inflows are recorded in the balance of payments (BOP), leading to a buildup in inflation pressures and a possible asset bubble.
Inflation averaged 4.2 percent in the first eight months of the year, or within the BSP full-year target of 3.5 percent to 5.5 percent, while the Philippine Stock Exchange index was the biggest gainer among Asian peers on September 21 and 22.
"These are things that we need to consider when looking at those foreign exchange flows. They will be considered by the BSP particularly when we meet in October for the monetary policy meeting," Guinigundo said.
He said BSP Governor Amando Tetangco Jr. will announce any change in the next few weeks.
Guinigundo said capital flows would cause the domestic currency to appreciate, helping monetary authorities to manage inflation. It also leads to accumulation of gross internal reserves (GIR), which brings additional comfort to the market, particularly to investors.
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