RP central bank to review foreign currency reserves<\/p>\n
MANILA (Agencies): The Philippines central bank said yesterday
\nit would review its targets for foreign currency reserves and
\nbalance of payments because of the cost of defending the peso
\nsince April.<\/p>\n
\"(The targets) will be reviewed to take into account what's
\nhappening now,\" Bank managing director Amando Tetangco told
\nreporters.<\/p>\n
The Bank on Friday gave in to speculative pressure on the
\npeso, which fell 11.5 percent after being allowed to float.<\/p>\n
Under its current targets, the Bank targeted gross
\ninternational reserves this year at $13.9 billion, up from $11.8
\nbillion at the end of 1996.<\/p>\n
But reserves had already slumped to $10 billion by the end of
\nlast week, or less than three months' worth of imports.<\/p>\n
The overall balance of payments surplus was put at $2.9
\nbillion, compared to last year's $4.1 billion.<\/p>\n
By the end of May, the BOP surplus was just $2 million because
\nof large outflows to cover debt servicing and central bank dollar
\nselling to shield the peso.<\/p>\n
President Fidel Ramos appealed for calm yesterday as fears of
\nhigher prices and hoarding swept the Philippines following the
\nplunge in the peso.<\/p>\n
\"I am appealing to all our people not to be suddenly
\ntraumatized by these actions of the Central Bank,\" Ramos told
\nreporters. He said the move was not a depreciation or a
\ndevaluation but a situation where the Central Bank was \"getting
\nout as a market player.\"<\/p>\n
Ramos, who said the decision to float the peso was made during
\nan \"intensive\" meeting at the presidential palace Friday, said
\nthe International Monetary Fund and foreign investment houses
\nwere informed of the move, which they supported.<\/p>\n
While officials offered assurances that inflation would remain
\nat single-digit levels this year, some analysts voiced concern
\nover the chain effect a lower peso would bring to an import-
\ndependent economy.<\/p>\n
The year-on-year inflation rate in June was 4.8 percent, with
\ninflation target for the whole of 1997 pegged at 5.2 percent.<\/p>\n
Economic Planning Secretary Cielito Habito said yesterday the
\npeso depreciation was likely to settle at around 10 to 15 percent
\nafter it had recovered from the jolt of the devaluation.<\/p>\n
\"Once the initial knee-jerk reactions in the market subside,
\nequilibrium will likely be restored at a level representing not
\nmore than 10-15 percent depreciation,\" he said.<\/p>\n
Habito said there was no reason for the exchange rate to
\nspiral because the Philippines' economic fundamentals remained
\nsound while the productive sectors enjoyed robust growth rates.<\/p>\n
Habito said \"things could have turned for the worse\" had the
\ngovernment continued to defend the peso against speculative
\nattacks.<\/p>\n
\"It is in fact a good time to have a much-needed depreciation,
\nbecause the inflation rate is very low at less than 5 percent,\"
\nhe added.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rp-central-bank-to-review-foreign-currency-reserves-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}