BANGKO Sentral ng Pilipinas Governor Amando Tetangco Jr. said the monetary policy stance remains appropriate at the moment despite the exit of Great Britain from the European Union.
“We can expect more volatility in domestic markets in the near term. Even as the direct Philippine exposure to UK is relatively small, we will watch the impact on us via contagion from moves in the US dollar,” Tetangco said in a statement to reporters.
“Medium term we will look at developments particularly how the rest of EU will react to Brexit. BSP is ready to provide liquidity to our market as needed. But we don’t see any need to change stance of monetary policy at the moment,” Tetangco said.
Outgoing Finance secretary Cesar Purisima, meanwhile, said the Philippines could face market volatilities following the exit of the UK from the EU.
“In light of the United Kingdom voting to leave the European Union, the world has entered uncharted waters. Its immediate repercussions will roil the global financial markets and affect all countries, without exception but with varying degrees,” Purisima said in a statement.
“The improvement in the fundamentals of the Philippine economy will put us in good stead but should not lull us into overconfidence. The Philippines is taking a cautiously vigilant stance on the Brexit’s effects on our shores—gradual and minimal at this stage,” he added.
The Finance department said about 200,000 Filipinos work in the UK, sending around $1.4 billion in 2015, about 5.6 percent of the total remittances.
“Their welfare is one of the government’s topmost priorities as we watch the resulting developments unfold,” Purisima said.
“We likewise note that our diplomatic and economic relationship with the UK is not contingent on its membership in the EU. As such, our ties will continue to strengthen and deliver tangible benefits for both our peoples for the long-term. We are heavily invested in our productive economic partnership with the UK and will remain so regardless of the Brexit vote,” he added.
The policy-setting Monetary Board of Bangko Sentral on Thursday kept the benchmark interest rates steady due to a manageable inflation environment and robust domestic economic growth.
Deputy Governor Diwa Guinigundo said the bank regulator was closely monitoring the foreign exchange market and “prepared to act in order to ensure orderly transactions and smooth wild volatility.”
“And we are confident that the flexible exhange rate regime would be able to absorb the necessary adjustments should they be necessary. After all, the market should be assured of the strength of the Philippine macroeconomy and the banking system as well as the comfortable level of both our FX reserves and the FX deposits in the banks,” Guinigundo said.
Guinigundo earlier downplayed any significant impact to the Philippines of the exit of Great Britain from the European Union. He assured the bank regulator was ready to take the necessary actions to counter any negative effect of the development to the domestic financial markets.