Philippine peso sinks to 31st record low at P63.615

MANILA, Philippines — The Philippine peso sank to a fresh record low of P63.615 to $1 on Friday, October 23, marking the 31st time this year that it closed at an all-time low.

The peso weakened by 9.5 centavos from Thursday's P63.52 finish, which had set the previous record. 

Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said Thursday that the central bank was not raising interest rates to support a particular exchange rate.

The central bank, however, may step into the foreign-exchange market to curb sharp swings that could fuel inflation.

"We do intervene a little bit in the foreign exchange market, but that's mainly to avoid swings in the exchange rate that tend to be inflationary. We have estimates of how much the peso has to move before it becomes inflationary, and that's when we tend to intervene," Remolona said.

His remarks followed the Monetary Board's decision to raise the BSP's benchmark interest rate by 50 basis points to 5.5%, its fourth consecutive increase.

The BSP described the larger move as a response to broadening price pressures and further risks to the inflation outlook, rather than an attempt to defend the peso.

A weaker currency can make dollar-priced imports, including fuel, more expensive in peso terms and add to inflation. That gives the central bank reason to limit disorderly exchange-rate swings even as it allows the market to determine the peso's level.