THE Philippine peso rebounded back to the P50:$1 level on Tuesday, buoyed by the decision of the central bank to reduce the reserve requirement ratio (RRR) of local banks.
The local currency gained 43 centavos to close at P50.9:$1 from Monday’s finish of P51.33:$1.
“This is as (Bangko Sentral ng Pilipinas) communicated an RRR cut and probably more,” Robert Dan Roces, chief economist at the Security Bank Corp., said in an email interview.
BSP Governor Benjamin Diokno on Tuesday said the RRR – the amount of cash banks are required to hold in reserve – will be reduced by 200 basis points effective next Monday, Mar. 30.
“Potential cuts on RRR for other banks and non-bank institutions will also be explored… BSP will soon issue guidelines on these adjustments,” he said.
The reduction, according to Diokno, will allow central bank the flexibility to ensure liquidity amidst the coronavirus disease 2019 (COVID-19) health crisis.
On Monday, the central bank said it will purchase P300-billion worth of government securities to support government programs against the spread of COVID-19.
The BSP also last week slashed policy rates by 50 basis points, providing economic stimulus given the COVID-19 health crisis.(GMA News)
