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.