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  • Writer's pictureBy The Financial District

BSP Keeps Steady FX Swap Position

The central bank's foreign exchange (FX) swap operations reallocated maturities but maintained the same position of $3.89 billion in June.

The peso has shown some volatility at the P55-56 level in the past two weeks.

Based on Bangko Sentral ng Pilipinas (BSP) data, residual maturity of up to one month totaled $1.96 billion in June, up from $1.85 billion in May. Meanwhile, up to three months maturity slipped to $1.93 billion from the previous $2.04 billion. The swaps remain in long positions.

The BSP conducts FX swaps to sterilize its reserves accumulation. Holding long positions is a signal that the BSP is buying more US dollars.

The peso vis-à-vis the US dollar closed at P56.595 last August 31. There was no spot market on September 1 due to the suspension of BSP PhilPassPlus operations after Malacañang declared Friday as a non-working day because of typhoon Goring.

Meanwhile, the BSP resorts to FX swaps when the implied peso rate in the swap market is lower than the reverse repurchase or RRP overnight rate, which means it is cheaper.

The peso has shown some volatility at the P55-56 level in the past two weeks.

All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

However, BSP Governor Eli M. Remolona has said that BSP's hawkish monetary policy stance is good for the exchange rate; it strengthens the peso. At the P56 to the US dollar level, the BSP considers the peso movement as stable against the greenback.

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