Peso Depreciation a Healthy Move

The head of the Philippine central bank said on Sunday the depreciation of the country’s peso was a healthy correction in line with economic fundamentals, Reuters reported. The peso is Asia’s worst-performing currency this year, having lost 2.8% to the dollar, against which it hit an 11-year low last month. Bangko Sentral ng Pilipinas Governor Nestor Espenilla said the depreciation in recent months was modest and gradual and reflected the “dynamic price discovery process on the back of strong and sustained imports growth as the economy hums along.” The BSP would use its resources and regulatory powers to thwart speculative attacks on the peso, Espenilla said, reiterating previous comments. While the central bank had to “practice self-restraint”, ensuring a market-determined exchange rate should not be interpreted to mean it was passive in the market, he added. Those who wanted more certainty to insulate a transaction from exchange rate volatility could hedge their investment, Espenilla said.