Peso weakness won't affect policy - BSP chief

The depreciation of the local currency to a near 17-month low is not large enough to affect inflation expectations, which may lead to rate cuts later this year or early next year, Bangko Sentral ng Pilipinas BSP) Governor Eli Remolona Jr. said.

- KEISHA TA-ASAN

"I would say the central scenario would be we ease in the fourth quarter. If things are worse than we think, we might postpone it to the first quarter of 2025," Remolona told reporters in a press briefing.

He noted that the peso is not performing poorly as the markets are adjusting more to current developments, including tensions in the Middle East and hawkish comments from the US Federal Reserve.

"It's not a case of a weak peso, it's a case of a strong dollar. Unless the movements are very sharp, we tend to allow the adjustment to happen," Remolona said.

The Philippine peso lost 19.2 centavos to breach the 57 to $1 level on Tuesday, its weakest finish in nearly 17 months or since it closed at 57.375 to $1 on Nov. 22, 2022.

"The magnitude of the adjustment of the peso has not been large enough to affect inflation expectations. So, for now, I think the impact on monetary policy is not large," he said.