By Ditas B. Lopez, Bloomberg

The Philippine peso’s nearly 8% slide against the dollar this year may prompt the central bank to deploy more tools to stabilize the currency, according to marketwatchers.

The peso hit a new low of 64.200 to a dollar on Tuesday, making it Asia’s worst performer so far in October, as elevated energy prices weigh on the nation which relies heavily on imports for fuel supplies. The Philippines has taken a series of steps to cushion the impact of the Middle East crisis, including a surprise 50-basis-point hike this month to rein in inflation.

Here are other measures Philippine authorities may consider to support the peso:

TIGHTER OVERBOUGHT FX-POSITION LIMIT
Reducing the amount of greenback banks can hold in excess of their dollar liabilities may increase the supply of US currency in the market.

“It’s a possibility,” said Paul Favila, Citigroup Inc.’s country officer in the Philippines. Such a move would help curb speculation, he said. However, “the real issue lies in the fact that we are overly reliant on imports while actual commodity prices have gone up.”

MORE BSP SECURITIES ISSUANCE
BSP securities are monetary instruments issued by the central bank to influence the amount of money circulating in the financial system.

Issuing larger volumes of its own debt securities and other short-term tools such as term-deposit facility allows the central bank to absorb more cash.

HEAVIER SPOT AND FORWARD INTERVENTION
The BSP may intervene more in the spot market by selling dollars out of the country’s foreign exchange reserves. The nation has already deployed some of its foreign reserves to limit the peso’s decline.

Alongside spot intervention, it could actively use derivatives to help shape expectations about future exchange rates, particularly if pressure is concentrated in the forward market.

STRONGER VERBAL INTERVENTION
The central bank can signal more strongly that it considers the exchange-rate moves excessive and that it stands ready to intervene.

Monetary authorities have resorted to this measure several times under previous administrations. This eliminates the need to actually dip into the dollar reserves.

President Ferdinand Marcos Jr. on Wednesday pledged to defend the peso “as hard as we possibly can.”

PUSH FOR FISCAL MEASURES
Monetary authorities can push for fiscal measures to improve market sentiment. If the Department of Finance, headed by Frederick Go who also sits as a member of the central bank’s Monetary Board, can show that fiscal gap and debt will be contained, it can potentially ease pressure on the BSP to raise rates aggressively.

“The government needs to contain the fallout from the weakening peso and pursue both monetary and non-monetary measures to restore investor confidence,” said Jonathan Ravelas, a senior adviser at Reyes Tacandong & Co. in Manila. — Bloomberg