MANILA, Sept 7 (Reuters) - The Philippine central bank will take all actions necessary to deal with speculative activity to prevent sharp swings in the foreign exchange market, its governor said on Friday, as the peso hit a more than 12-year low against the dollar.
Consumer prices have been under pressure due in part to the peso’s weakness, sparked by fears of a widening current account deficit and an escalating Sino-U.S. trade war.
Bangko Sentral ng Pilipinas Governor Nestor Espenilla said policymakers will take “strong immediate action using the full range of instruments in its toolkit” to manage inflation, which quickened to its fastest pace in nearly a decade in August.
“The follow-through actions will also address other threats to higher inflation such as excessive exchange rate volatility,” Espenilla told reporters in a mobile phone message.
The Philippine peso touched 53.975 to the dollar on Friday’s trading, its lowest since June 2006.
The central bank has raised rates by 100 basis points since May, including the last 50-bps hike on Aug. 9, which brought the interest rate on its overnight reverse repurchase facility to 4.0 percent.
It has signalled it was open to further tightening to tame consumer price growth, with the economy strong enough to accommodate higher borrowing costs.
After the forecast-topping inflation rate of 6.4 percent in August was released on Wednesday, some analysts said the central bank would have to jack up rates aggressively in response. .
The central bank has a 2-4 percent inflation target for this year and next.
When asked if the central bank would consider holding an “emergency policy meeting” ahead of its scheduled review on Sept. 27, Espenilla said: “That’s an option. We’ll see.”
Reporting by Karen Lema Editing by Shri Navaratnam