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The Philippine currency is likely to continue the rising trend this year, even in the face of global currency wars, the country's central bank predicted on Sunday.
The Philippine peso strengthened by 6.8 percent last year versus the greenback. The trend is expected to continue this year as capital inflows swamped the Philippines on the back of optimism that its strong macroeconomic fundamentals will persist. "Our policy remains to ensure that the exchange rate reflects the country's underlying fundamentals," central bank Governor Amando Tetangco Jr. said.
"Even in the face of what many believe to be 'currency wars', this will not be likely to change," he added.
Developed economies in Europe and the United States remained mired in debt crises, prompting more monetary easing that drives away investors. Japan was the latest to follow this strategy, unveiling large-scale asset purchases last month targeted at ending years of deflation.
But Tetangco, echoing other policymakers, quelled concerns of a looming currency war, where economies devalue their currencies to boost exports and growth to the detriment of others.
"In my opinion, the underlying reason for what is seen as a race to currency depreciation really is an attempt by national authorities to adopt policies to attain domestic objectives," Tetangco said.
The Philippine central bank, he said, has remained "watchful" of capital inflows and the potential implications of excessive currency appreciation and asset bubble formation.
In particular, he vowed monetary officials will keep their " strategic presence" in the foreign exchange market. The peso has firmed up by roughly one percent versus the U.S. dollar this year from its last trading day in 2012.
"The (central bank) will continue to put in place macroprudential measures, as appropriate, to ensure that the exchange rate remains aligned with its fundamental value," he said.
