MANILA, Philippines – Capital controls are still off the table even if only to prevent money from leaving the Philippines, the Bangko Sentral ng Pilipinas (BSP) said.
BSP Governor Amando Tetangco Jr. said the central bank is “not looking at capital controls” to temper the slump in the financial markets driven by worries the US will scale back its stimulus measures soon.
Earlier this year, the idea of capital controls has also been floated, that time to manage the reverse: large inflows flocking to emerging markets for better returns.
But after the US Federal Reserve said it may taper off its quantitative easing measures “later this year,” investors have begun leaving developing nations on optimism interest rates will soon rise in the world’s largest economy.
The actions of investors caused the Philippine Stock Exchange index to lose 3.41 percent on Monday and close at 5,971.05, the lowest since January.
The peso, meanwhile, slumped to its weakest level since January last year to end trading at 43.84 versus the greenback.
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On Saturday, BSP Deputy Governor Diwa Guinigundo said the country will “maximize the returns” of its foreign reserves to have enough buffer to cushion outflows.
BSP Assistant Governor Ma. Cyd Tuano-Amador, for her part, said the weakening of the peso has limited effect on inflation.
“There is a considerable range where the peso can move before any breach of the inflation target can happen,” Amador said last Friday.