BSP urged to probe possible currency ‘flash crash’

The Bangko Sentral ng Pilipinas (BSP) should look into a "possible flash crash" observed on July 20 when the Philippine peso-US dollar rate dropped from P50.54 to as low as P42.82 to a dollar.

“Foreign exchange trading platforms have always been sources of volatility, but when these sudden crashes take place without explanation, and different market makers yield wildly different rates, that could be a problem for Philippine trade and the credibility of the PHP as a currency,” Salceda said.

The House Ways and Means chairperson said that such spikes may be bad for exporters, who are still reeling from closures or business disruption due to the COVID-19 pandemic.

“It was probably human error, but I’m not discounting the possibility that somebody bought an obscene amount of pesos with US currency,” Salceda said.

“We want to watch out for events like this because we are a very foreign currency-dependent country, given our large OFW community. You don’t want wild gyrations like this, especially based on faulty information, human error or technical issues,” he added.

According to Salceda, traditional sources of foreign exchange data such as Tullett Prebon Electronic And Voice Interdealer Broker showed that USD to PHP trading rates ranged between P50.47 to P50.99.

“Reuters’s Currency Rates, which the Bangko Sentral uses, also showed no such real-time spike in the value of the peso,” Salceda said.

“Even Bloomberg showed no signs of the PHP’s spike, but there are reports that some retail traders were indeed able to buy and sell dollars at the rates as low as P42.83, which would be the all-year low,” he added.—LDF, GMA News