Analysis: Philippine central bank runs low on intervention funds

The Philippine central bank has cleaned out its coffers over the past year, spending billions of pesos to shield its currency and economy from the impact of large inflows of foreign money.

Now, as the cash flows to fund market intervention dry up, the Bangko Sentral ng Pilipinas (BSP) knows it is facing tough -- and limited -- choices.

Stepping aside and letting the peso appreciate is the easiest option, even if highly undesirable at a time when major economies such as Japan and Britain have the economic advantage of easy policies and weak currencies.

“The BSP has experienced losses from the combination of reserve build-up in the face of capital inflows, strong currency appreciation, sterilization to manage domestic liquidity, and low reinvestment returns on dollar assets relative to cost of sterilization,” Governor Amando Tetangco told Reuters this week.

Reference: https://www.reuters.com/article/us-philippines-bsp-idUKBRE92D04H20130314