While the BSP leaves the determination of the value of the peso to market forces, there is scope for occasional BSP action to dampen excessive volatility in the exchange rate that could potentially undermine the price stability objective. On the external front, we expect that the balance of payments (BOP) will remain strong.
Unless there is aggregate demand to meet such new capacity, it will end up aggravating the deflationary pressure. It is for this reason too that monetary easing needs to alleviate deflationary pressure stemming from structural reform. BIS central bankers’ speeches  5  B.