RP official recommend devaluing peso

RP official recommend devaluing peso

MANILA (AFP): A group of high-ranking government officials and
business leaders has recommended to President Fidel Ramos a
"possible gradual depreciation of the peso," the presidential
palace said yesterday.

The 140-member "Caucus on Competitiveness" was held at the
palace last weekend to discuss strategies to make domestic
products competitive abroad, a palace statement said.

It said the caucus recommended an exchange rate review "to
allow gradual adjustments to a more realistic rate through a
possible gradual depreciation of the peso."

The caucus called for any depreciation to be conducted "in a
well-calibrated manner to attain competitiveness in the global
market from tradable Philippine products and services."

Ramos had no immediate reaction to the recommendation.

Finance Secretary Roberto de Ocampo on Monday denied a report
attributed to him that the peso would be devalued in the coming
weeks, which triggered a speculative attack on the peso.

The government raised overnight interest rates and intervened
on currency markets to protect the currency.

The caucus included representatives from the private sector
including the Export Development Council, foreign and local
chambers of commerce and financial executives.

It also comprised more than 40 government officials from the
trade, finance, energy, and transportation departments.

Peso-dollar trading was "much more tame" Tuesday compared to
the previous day, a trader with a local commercial bank said,
with the peso trading between 26.399 and 26.398 to the dollar.

The head of the Philippines' main business organization on
Tuesday opposed calls for a devaluation of the Philippine peso
amid speculative attacks on the local currency.

Frederico Pascual, president of the Philippine Chamber of
Commerce and Industry, said in a statement that in the past "peso
devaluation has not really prodded export growth."

"On the contrary ... steep devaluation has invariably fueled
inflation via higher wage demands, higher prices of prime
commodities which in turn, push interest rates and cost of
production all of which erode any gain for the exporters from the
devaluation," Pascual said.

Pascual said that the slump in Thai baht following its shock
float on July 2 -- which led to an attack on the peso by overseas
speculators -- was "not a valid reason for peso devaluation."