Manila: Britain’s exit from the European Union may threaten Filipino remittances and the peso, but sound macroeconomic fundamentals will cushion any larger negative impact on the Philippine economy.
For the Philippines, the fallout would be felt more in the financial markets, according to Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands (BPI), reported Manila Times.
“The Philippines will be affected mainly on the financial market channel as we are susceptible to financial market volatility—sell-offs in stocks, bonds, and weakening of the peso,” Mapa reportedly said.
In the wake of ‘Brexit’, the Philippine peso weakened to a seven-week low against the US dollar, shedding 42 centavos to close at PhP46.95 to $1 from its PhP46.53 finish on Thursday, the lowest level of the local currency since reaching PhP46.96 to $1 on May 2.
Total transactions had risen to PhP621.5 million from PhP591 million in the previous session.
“As expected, the US dollar and yen benefited as safe haven currencies. While regional currencies are down, the peso remained in the middle of the pack,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr., reportedly said in a text message to reporters.
“We can expect more volatility in domestic markets in the near term,” he added.
Tetangco noted that even as direct Philippine exposure to the UK is relatively small, the central bank will be watching the impact on the local economy via contagion from moves in US dollars, according to Manila Times.
In the medium term, he further said monetary authorities would watch developments as the rest of the EU reacts to Brexit.
“BSP is ready to provide liquidity to our market as needed. But we don’t see any need to change our stance on monetary policy at the moment,” he was quoted as saying by the news portal.
