BANGKO Sentral ng Pilipinas (BSP) governor Eli Remolona Jr. said the central bank would develop this year a foreign exchange (FX) intervention framework.
“We’re developing a framework for intervention. We think intervention should only happen during times of stress. It’s meant to contain stress,” Remolona said in his speech at the 22nd Weekly Membership Meeting of the members of the Rotary Club of Makati held at the Manila Polo Club.
“I think we’ve been intervening a bit too much. If it’s about containing stress, that also means intervention should be infrequent.”
Citing an example, he said October 2022 was a “stressful episode.”
To recall, the peso closed at 59 to the US dollar in October 2022, which was attributed to the dollar’s strength after the sustained hikes in the Federal Reserve’s key rates.
“So those are the events in which we want to intervene,” Remolona said.
He noted that the BSP should know what causes the peso movement.
“We are talking about the framework for the FXI, so we have a homework to do, to study. If we intervene… like I said, it’s to contain stress, but how do you tell that it’s stress?” he said.
Remolona cited the importance of looking at the country’s peers and not just focusing on the peso-dollar exchange.
“So, one of our homework is to know our peers. Which countries are on the same boat as we are? That’s still not clear. In the next weeks maybe we’ll understand more,” he said.
“The Monetary Board wants to be briefed on this. So, the first effort will be to know enough to brief the Monetary Board.” (PNA)/PN
