PALACE GIVES CLASHING VIEWS ON STRONG PESO
MANILA, NOVEMBER 4, 2010 (TRIBUNE) By Aytch de la Cruz - President Aquino's many-headed communications group gave conflicting statements yesterday on the government's position on the strong peso which ended yesterday at another high for more than two years of 42.59 per dollar with one saying that the Bangko Sentral ng Pilipinas (BSP) will not "fight the market" while the other telling reporters that the BSP is intervening to keep the peso within a set range.
Presidential spokesman Edwin Lacierda (photo at right) told reporters in a regular Palace briefing that the government will take necessary measures to ensure that the peso will be in a range that is comfortable for all sectors concerned.
Later, however, Presidentical Communications Group head Ricky Carandang (photo at left) said the BSP is not going to fight the market despite demands from exporters and Filipinos working abroad for the government to do something about the surging value of the peso.
The peso strength is a concern because you have to balance the exporters, and also the overseas Filipino workers (OFWs), and all the other concerns.BSP will be on top of the situation.
Last week, the BSP approved measures to encourage capital outflows and help temper the peso's gains of more than eight percent this year.
The BSP, however, ruled out capital controls and indicated while dollar inflows could complicate policy settings it did not want to discourage investors as the country needs funds to upgrade infrastructure.
"The best that monetary officials can do is really to make sure that the fluctuations are not so violent or not so volatile," Carandang said.
"You cannot force your currency to where you want it to go. It's a function of market forces that are in many cases beyond our control. So maybe more coordination, more talks between central banks in the region and governments in the region," he added.
The Monetary Board (MB) now allows the private sector to prepay their BSP-registered foreign loans with the fund to be sourced from banks and money changers without prior BSP approval after submitting necessary documents.
MB also allowed banks that were requested by foreign investors to covert peso to other currencies only if the amount to be remitted abroad is equal to that amount the investors brought in the country "subject to conditions and documentary requirements."
Investors are now also allowed to buy from banks and money changers up to $60 million per year if this would be used for foreign investments or placements in Republic of the Philippines debt instruments issued overseas.
BSP Gov. Amando Tetangco Jr. said the amendments "are expected to encourage greater foreign exchange outflows at this time that the domestic currency has been appreciating against the US dollar."
"Based on the BSP's analysis, while the amendments will help temper the strengthening of the peso, the impact on both domestic liquidity and inflation will be minimal," he said.
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Chief News Editor: Sol Jose Vanzi
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