MANILA Philippine monetary authorities raised key rates on Friday by a percentage point and intervened in the foreign exchange market to support the peso, AFP quoted traders and officials as saying.
However analysts warned that this relief would not last for long and that a loss of business confidence amid political and economic uncertainties was at the root of the currency's weakness.
The overnight borrowing rate will rise to 11.0 percent from 10.0 percent, and the overnight lending rate will move up to 13.5 percent from 12.5 percent "effective Monday," said Central Bank of the Philippines Governor Rafael Buenaventura.
"The policy rate adjustments are aimed at addressing the emerging inflationary pressures that could arise from the ... effects of the weakening of the peso-dollar exchange rate," he added.
Buenaventura also said the Central Bank intervened in the market for the third day in a row to contain the peso's fall.
The monetary board tweaked the policy rates after the peso's continued its fall despite the Central Bank's action of selling dollars on the spot market on Wednesday and Thursday.
The peso opened lower at 45.600 to the dollar on Friday, compared to Thursday's close of 45.530 but recovered to close at 45.495 pesos to the dollar, the Bankers Association of the Philippines said.