Philippines central bank managing excessive volatility as peso trades at 11-year lows

MANILA, Feb 25 (Reuters): The Philippines central bank is selling its dollar reserves as a defensive measure to manage excessive volatility driven by speculation against the peso, which is hovering near 11-year lows, the bank's governor said on Sunday.

The Bangko Sentral ng Pilipinas (BSP) chief sought to allay concern that recent market reforms would put more pressure on an already weak currency and stoke inflation.

"BSP sells foreign exchange from its reserves to manage excessive peso volatility," said BSP Governor Nestor Espenilla, adding that the tongue cancer he had been diagnosed with in November was successfully treated and he was closely monitoring the financial markets.

The Philippine peso closed at an 11-year low at 52.34 pesos per dollar last week. It ended the week at 51.89.

The central bank chief also dispelled market concern that a cut in banks' reserve requirement ratio would accelerate inflation, which hit 4.0 per cent in January, the highest since October 2014.

"What BSP is executing is just an operational adjustment that should have a neutral effect on the monetary policy stance," Espenilla told reporters, calling the fears of ensuing looser monetary policy "unfounded".