Philippines worst hit in ASEAN by surging yen<\/p>\n
KUALA LUMPUR (AFP): The emerging economies of the Association
\nof Southeast Asian Nations (ASEAN) have been bashed by the
\nrunaway yen to varying degrees, with the Philippines most badly
\nhit, a leading broking house said yesterday.<\/p>\n
The impact of the rising yen was most damaging to the
\nPhilippines in terms of ballooning foreign debt obligations,
\nfollowed by Indonesia, Thailand and Malaysia in that order, top
\nlocal brokerage Rashid Hussain Bhd. (RHB) said in an analysis.<\/p>\n
"The peso has plummeted by 26 percent against the yen (since
\nthe beginning of the year). The ringgit, baht and rupiah have all
\nfallen by as much as 15 percent to 17 percent," said the
\nbrokerage.<\/p>\n
Malaysia, which has the smallest fraction in yen-denominated
\nloans, was the only country where the appreciation in its foreign
\nreserves of US$1.7 billion had actually outweighed the $1.6-
\nbillion increase in its foreign debt load, said RHB.<\/p>\n
The RHB analysis did not include ASEAN member Singapore
\nbecause of the safe haven status of its currency and also
\nexcluded Brunei.<\/p>\n
The Philippines and Indonesia would be hardest hit due to
\ntheir large foreign debt obligations -- mainly denominated in yen
\n-- contrasted with small foreign exchange reserves, said RHB.<\/p>\n
The Philippines debt burden was estimated to have grown by
\n$2.8 billion, or 17.2 percent, since January compared to an
\nincrease in foreign reserves of only $500 million.<\/p>\n
Indonesia<\/p>\n
Indonesia's foreign debt had ballooned by $7.8 billion, or
\nseven percent, while its foreign reserves had only grown by $1.1
\nbillion.<\/p>\n
The report said Thailand was less badly hit, with an increase
\nin foreign debt of $4.3 billion and its foreign reserves higher
\nby 2.8 percent.<\/p>\n
The surging yen had also eroded ASEAN export earnings to Japan
\nwhile bumping up Japanese import prices.<\/p>\n
"The impact on imports and the trade balance will be most
\nsevere for the Philippines and Thailand. Both countries import a
\nlarge fraction from Japan (above 20 percent) and run a large
\nbilateral trade deficit with Japan," said RHB.<\/p>\n
RHB economists said the trade deficit was likely to worsen
\nfurther because of the low price elasticities of most of the
\nimports, mainly made up of components and specialized goods.<\/p>\n
The only respite the Philippines was likely to see was in
\nterms of export earnings, said the report.<\/p>\n
While Indonesia and Malaysia's exports to Japan were made up
\nmainly of price-inelastic commodities denominated in dollars,
\nPhilippine exports to Japan were less commodity-based and more
\nsensitive to price changes.<\/p>\n
In the long-run, RHB analysts said the currency turmoil was
\nlikely to push more Japanese corporations to step up investment
\nin ASEAN countries.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/philippines-worst-hit-in-asean-by-surging-yen-1447893297",
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"sponsor": "Okusi Associates",
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