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.