The outlook for the Philippine peso remains bright, with the expected continued support from monetary authorities and the rising gross international reserves, an economist said over the weekend.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said in a report a relatively high GIR could fundamentally provide some support for the peso exchange rate especially against “any speculative attacks.”
Latest data from the Bangko Sentral ng Pilipinas showed that the GIR level rose to $100.2 billion as of end-March 2023 from $98.2 billion in February. It represented a more than adequate external liquidity buffer equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income.
It was also about 6.0 times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity.
Ricafort also said any Federal Reserve rate decision of a possible 25-basis-point hike or pause on May 3, 2023 would likely be matched locally on May 18, 2023, a move that could maintain comfortable interest rate differentials that help stabilize the peso, import costs/prices and overall inflation.