Use of regional money in trade wins support

Use of regional money in trade wins support

MANILA (AFP): The Philippine central bank chief said Monday that he supported plans to use local currencies to pay for regional trade to save on dollars and prevent currency speculation amid Asia's financial crisis.

The plan will "reduce the demand for U.S. dollars for trade as well as speculative purposes," said Gabriel Singson, adding that it would give a boost to trade within the Association of Southeast Asian Nations (ASEAN).

The central bank chief explained in a statement that the "plan involves payment of exports in the currency of the exporting country trading within the region."

He stressed, however, that trade "will still be calculated and quoted in terms of the daily prevailing exchange rate of that currency with respect to the U.S. dollar."

According to central bank figures, Philippine annual exports to ASEAN countries amounted to at least $2.8 billion while imports totaled some $3.79 billion.

Singson said that this country "stands to gain from the proposal ... as its demand for U.S. dollars will be pushed back to the settlement date."

The central bank head said that the proposal could be discussed further at a meeting of Southeast Asian central bank governors in Indonesia later this week.

The proposal figured in discussions between Philippine President Fidel Ramos and visiting Malaysian Prime Minister Mahathir Mohamad last Friday where the two heads of states agreed to hasten such a plan, according to a presidential statement.

Foreign secretary Domingo Siazon said Monday that an initial currency swap scheme was ready to take off between the Philippines, Malaysia and Thailand as soon as the Thai government gives its go ahead.

Officials have said that initial plans were to link these three countries but talks continue with other ASEAN members. Indonesia, however, has reportedly opted out of the scheme owing to the rupiah's present volatility.

ASEAN groups Brunei, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.