A weakening currency stokes import costs and adds pressure to inflation already hovering above the central bank’s target of 2% to 4%.
“The central bank has initiated actions to moderate sudden movements in the peso, including participation in the foreign-exchange market as well as looking into possible cases of speculative activities,” said Diokno, who sits on the monetary authority’s board.
Policy makers encourage the use of the formal market for currency transactions, he said during a live-streamed speech Friday in Washington, D.C. The bank will take steps to manage any financial-market disruption, he said. Bangko Sentral “will take all necessary measures including raising interest rates,” Governor Felipe Medalla said at the same event. The central bank has also sold dollar reserves, he said, in addition to raising rates by a total of 225 basis points so far this year.
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