MANILA – The Philippine peso appreciated against the US dollar last Friday as the latest decision of monetary authorities to ease policy rates supported the local unit.
The local currency shed 16 centavos to close at P51.88:$1 from 52.26 on Thursday.
“The latest 0.25-cut in local policy rate has positive effects on the local economy and financial markets in terms of lower borrowing or financing costs that help spur greater economic activities and faster GDP growth,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said.
The policy-setting Monetary Board on Thursday decided to cut rates by another 25 basis points (bps), bringing the overnight borrowing rate to 4.25 percent, the overnight lending to 4.75 percent, and the overnight deposit rate to 3.75 percent.
“Another positive factor: BSP Governor Benjamin Diokno signaled another possible cut in local policy rates and another possible cut in RRR (reserve requirement ratio) of banks as early as the next monetary policy-setting meeting on September 26, 2019,” Ricafort said.
The central bank chief has said the door is open to more rate cuts.
“On balance, therefore, the Monetary Board believes that the benign inflation outlook provides room for a further reduction in the policy rate as a preemptive move against the risks associated with a weakening global growth,” Diokno said.
“Going forward, the BSP will continue to monitor price and output conditions to ensure the monetary policy remains appropriately supportive of sustained non-inflationary economic growth over the medium term,” Diokno added. (GMA News)
