Manila raises interest rate

Manila raises interest rate

MANILA (AP): The Philippine Central Bank announced yesterday it will raise its key overnight borrowing rate to 15 percent from 13 percent in an effort to slow the peso's rapid depreciation.

The central bank also raised its overnight lending rate to 17 percent from 15 percent, also effective Tuesday.

The rise in overnight rates appeared to have an immediate calming effect on the market, with many banks reducing their offer rates for the dollar on the news. Higher interest rates tend to make a currency more attractive to investors.

Central Bank Governor Gabriel Singson said the decision to rise the rates was taken in response to the peso's sharp depreciation.

Singson noted that from a closing rate of 42.70 pesos to the U.S. dollar on Thursday, the peso weakened to 43.49 pesos on Friday and to 44.79 pesos in afternoon trading yesterday.