The International Monetary Fund (IMF) anticipates the Philippine peso to act as a buffer against volatility caused by changing monetary policies in both the US and the Philippines. The IMF acknowledges the peso's role in absorbing shocks and suggests that foreign exchange intervention might be necessary in specific situations. The report highlights the peso's vulnerability to shifts in US policy expectations, which have amplified its volatility.
The International Monetary Fund expects the peso to become a shock absorber with the shifting monetary policy of the US Federal Reserve and the Bangko Sentral ng Pilipinas.
“Shifting expectations regarding future policy rates in the US have raised peso volatility. The BSP has been appropriately focusing on domestic price stability, allowing the exchange rate to play its role as a shock absorber, and should continue to do so,” the IMF said.
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