RP ready for yuan devaluation

RP ready for yuan devaluation

DAVAO CITY (DPA): President Joseph Estrada Saturday assured
that his economic managers will work double time to prepare for
the possibility of a devaluation of the Chinese yuan as the
government reeled from a 1.28 per cent drop in the peso to its
lowest level in six months at the close of the week's trade.

"We will have to work double time. Our economic managers will
double their efforts to put in place the needed measures to
safeguard our economy and protect our people," said Estrada who
is visiting this southern city.

But he remained confident that China will not devalue the
yuan, based on an assurance earlier made by the Chinese foreign
minister.

Economists, however, raised anew the issue of devaluation when
the yuan slid to its five-year low and fell by 9 per cent late in
the week. On Friday, People's Bank of China Governor Dai
Xianglong told a weekly newspaper in Shanghai that China may
eventually adjust its currency peg.

The peso dropped to P43.49 against the U.S. dollar from
Thursday's close of P42.70 and the stock market share prices fell
to new lows.

Economists warn that China is the last remaining bastion of
stability in Asia. If it devalues its currency, it will trigger
the second and worst wave of currency devaluations in the
financially ailing region.

Estrada conceded that the Philippines, which was relatively
unscathed during the 1997 currency crisis, would have a difficult
time if China devalues.

"If they devalue, we will be affected. It would be difficult,"
he said.