Singson makes steady peso top of priority list
Philippines central bank governor Gabriel Singson said yesterday his key economic priority was to stabilise his country's currency.
Speaking in Hong Kong, he said he had seen evidence in recent weeks that the worst of the regional currency crisis could be coming to an end.
'To us, what is important is to stabilise the exchange rate so our exporters can plan,' Mr Singson said.
Mr Singson said the violent swings in the value of regional currencies appeared to be easing: 'This is not only in the case of the Philippine peso but the Malaysian ringgit, the Thai baht and especially the [Korean] won.' Mr Singson qualified his words by saying 'stabilising' meant currencies were no longer moving in swings of 10 to 12 per cent.
While he acknowledged that it was difficult to buck regional currency difficulties, Mr Singson said certain measures carried out in the Philippines had helped improve currency stability.
'One of the principal reasons why rates move up is because of panic on the part of people with US dollar loans who are not hedged,' he said.
In response to this the central bank implemented a programme, which it describes as a sort of insurance policy in case of devaluation.
'We insure our borrowers so that if the rate [against the US dollar] goes up by more than 1 per cent a month we will give them the difference. If on the other hand the rate does not move they will lose their premium,' he said.
Mr Singson said this programme had been instrumental in helping the peso market to settle down.
He said the central bank was in the process of sending invitations to 30 banks to become involved in what he described as a 'club loan' to the country.
'We are hoping each bank will put in US$50 million. Our target altogether is between $500 and $800 million,' he said.
This cash would be used to bolster central bank reserves.