Economy 2 MIN READ

UPDATE 1-Philippines says it has more than enough FX reserves

March 6, 2022By Reuters

Adds quote, comments on peso and inflation

The Philippines has more than adequate foreign exchange reserves to contend with any market volatility, though the impact on its own currency from the Russia-Ukraine conflict has been muted so far, the country’s central bank chief said on Sunday.

Governor Benjamin Diokno’s statement also said that the Bangko Sentral ng Pilipinas (BSP) has various liquidity enhancing tools that can be deployed if the domestic situation becomes unexpectedly tight or disorderly.

The Philippine peso has been trading in a narrow range, with slight depreciation pressure from the geopolitical impact on oil prices and has been moving in line with other currencies in the region, he said.

Diokno said that domestic foreign exchange reserves remain supported by steady inflows from remittances of Filipinos overseas, dollar revenue from the business process outsourcing industry and resilient foreign direct investments.

“The main channel through which the Russia-Ukraine war could affect the Philippines is higher oil prices,” he said.

Under a “worst-case scenario” of oil prices reaching $120-$140 a barrel this year, Diokno said inflation would average between 4.4% and 4.7%, above the bank’s 2.0-4.0% target band.

(Reporting by Enrico Dela Cruz
Editing by Catherine Evans and David Goodman


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