By FIL C. SIONIL
The clock is ticking towards the new big figure of P63 as tensions in the Middle East heightened, disrupting movements in trade and commerce, straining services and affecting our daily lives with prices of petroleum product hitting the roof.
What is big fig, you may ask? Well the common consensus currency traders is for our local currency to cross over the next big fig of P63 and from there on may go haywire to reach the mandatory government retirement age of P65.
As I write this, trading at the spot currency market showed the peso selling between the range of P62.68 and P62.81, slightly better than the high P62.925 Tuesday.
Days after the US-led hostilities in the Middle East erupted, the local currency started depreciating, falling to P60 mark and hence, has continually depreciated, prompting the Bangko Sentral ng Pilipinas (BSP) to recast the country’s monetary setting.
And with the peso on the edge and inflation threading a new frontier, talks going around the halls of the BSP point to the possibility of the Monetary Board, instead of a regular meeting, will do “an off-cycle” policy meeting tomorrow, at the earliest.
Even bank treasury officials and market analysts back an off-cycle meeting for the BSP that would align with the actions taken by major central banks of recasting monetary landscape taking into consideration developments in the Middle East.
The US Federal Reserves, for one, is expected to tighten monetary policy by 25 basis points anchored on sticky inflation. The Bank of Japan may likewise take the same route as inflation risks loom, raising y 25 basis points its interest rates to 31-year high of 1.25 percent.
From what I’ve gathered the bet is on whether the BSP will increase its rate by 25 basis points or be ahead curb, increasing the key interest rate policy by 50 basis points.
This may temper speculative attack on the peso, pulling the exchange rate back to P62.15 and P62.50 range. Otherwise, the peso could further weaken and breach the new big fig of P63 and may advance toP63.50.
A muted Banker source says the BSP may do an off-cycle “tomorrow, Friday or next week” and may not have to wait the new inflation number.
The next policy meet is scheduled next month yet. Let’s continue to watch has this will play out.
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