Peso declines after Monetary Board approves three-stage cut in reserve requirement

May 17, 2019

The peso declined against the US dollar on Friday, a day after the Monetary Board approved a three-stage cut effective of two percentage points in banks' reserve requirement.

The peso closed at P52.63, down 15 centavos from Thursday. Volume at the foreign exchange portal at the Bankers Association of the Philippines reached $1.183 billion from the previous session's $715.27 million.

The reserve requirement is now at 18 percent. The first cut of one percentage points takes effect on May 31 with the next two cuts set on June and July until the reserve requirement is at 16 percent.

''In reducing the reserve requirement ratios, the Monetary Board recognized the continued downtrend in domestic inflation,'' the Bangko Sentral ng Pilipinas said in a statement FRid

The Monetary Board also expects this adjustment to help mitigate any tightness in domestic liquidity conditions due to limited public expenditure following the budget impasse in the first quarter of the year.

Philippine stocks regained what it had lost the previous day as the main index rose 1.45 percent on Friday.

The Philippine Stock Exchange index finished at 7,583.82 points, up 108.66 points. In the broader market, there were 122 gainers, 72 decliners while 40 shares were unchanged.

Volume rose 935.86 million shares worth P8.21 billion from Thursday's 2.33 billion shares valued at P8.56 billion.

Most active shares were led by Ayala Corp., up 1.43 percent to P850; BDO, up 1.87 percent to P130.90 and Jollibee, down 2.81 percent to P277. DMS