Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said they are ready for volatilities arising from shifts in investor sentiment that could lead to volatility in capital flows arising from the geopolitical tensions between Russia and the West.
Last week, Russia announced that it plans to ban all food imports from the United States and all fruits and vegetables from Europe to counter measures imposed by the US and European Union against Russia amid the latter’s role in the Ukraine crisis.
The BSP chief said the effect of Russia’s announcement was observed in the declines in the Philippine Stock Exchange index and the peso. However, he stressed that the volatilities are short-term while the local domestic fundamentals remain strong. He added that BSP will adjust policy levers should these begin to have a more significant effect on commodity supply chains and global trade, and on global prices and domestic inflation expectations over the policy horizon.