Peso retreats as BSP announces 50 bps rate cut

The Philippine peso retreated against the US dollar on Thursday, in anticipation of further rate cuts from the Bangko Sentral ng Pilipinas (BSP).

The local currency lost 18 centavos to close at P50.8:$1 from Wednesday's finish of P50.62:$1.

According to Land Bank of the Philippines market economist Guian Angelo Dumalagan, the currency took into consideration the announcement of the central bank reducing key policy rates.

"The peso depreciated amid expectations of deeper BSP policy rate cuts and further reduction in the local reserve requirement ratio," he said in an email interview.

BSP Governor Benjamin Diokno on Thursday afternoon announced a reduction on key policy rates by 50 basis points effective Friday, April 17, 2020 -- the overnight reverse repurchase rate to 2.75%, the overnight deposit facility to 2.25%, and the overnight lending facility to 3.25%.

Moving forward, Dumalagan said the local currency could be swayed by the release of economic data from China for the first quarter of the year.

"The local currency might weaken due to a likely sharp decline in the Chinese economic growth for the first quarter of 2020, which is scheduled to be released tomorrow," he said. --KBK, GMA News