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."