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BSP says peso flash crash a pricing feed error
4:57 pm on 21 July 2021, Wednesday
The Bangko Sentral ng Pilipinas on Wednesday said the abrupt peso appreciation reported yesterday was likely a result of an error in its source feed.
In a statement, Governor Benjamin Diokno downplayed the “flash crash” that saw the peso rally to as high as P42.82 against the US dollar from its Monday finish of P50.54, saying the movement was unlikely caused by actual trading activities because yesterday was a holiday.
“The abrupt peso appreciation yesterday mentioned in the article was captured by the currency quotes from Google as well as a certain social media platforms. We would like to highlight that the source feed is not Bloomberg nor the Bankers Association of the Philippines (BAP),” the BSP chief said.
“We believe that these applications that showed the drastic drop in the USD/PHP rate had an error in its source feed. Yesterday, July 20, was a Philippine Holiday and domestic markets were shut. This means that there was no live official data source for the spot market,” he added.
After outperforming most Asian currencies last year, the peso is now trading at the P50-per-dollar level, a territory not seen in over a year.
The weakening of the currency was driven by surging demand for dollars, as improving economic conditions amid easing lockdowns give importers enough reasons to ship in more goods to meet a pick-up in local demand.
But Diokno said, “that someone would be willing to trade at these off-market prices using these apps can warrant further investigation.”
“We highly doubt that there were any material transactions dealt at those rates as these would definitely be ‘off market’ and would be subjected to internal reviews of these platforms,” he said.
“For the reasons above we believe that the particular applications for USD/PHP pricing was caused by a pricing feed error, exacerbated by the Philippine holiday,” he added.