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Thursday, February 05, 2004
Palace dismisses 'Argentina economy' scenario
MANILA -- President Arroyo warned currency speculators, dollar hoarders and profiteers anew following the continued weakening of the peso.
Presidential spokesman Ignacio Bunye also called the "Argentina scenario" with the plunging of the peso as exaggerated.
"The transient pressure on the peso is coming from perceptions of instability fueled by isolated military adventurism and excessive politicking. We can all help by staying calm and focusing on constructive economic endeavors. We must join hands in cushioning the adverse effects of the situation on the average Filipino family," Arroyo said.
The President said in a press conference in Dumaguete City, Negros Oriental, that the drop in the peso value is "just temporary."
Presidential spokesman Ignacio Bunye said while it would be noble for Cabinet members to unload their dollars to help the peso, like what some of them did last year, the more important thing is to lessen political bickering.
"(And) also try to prevent perceptions of instability because of an isolated military adventurism," he added.
The Standard Chartered Bank earlier warned that the Philippine economy might become another "Argentinian economy" following recent developments.
But Arroyo cited the 5.5 percent growth in gross national product, the 23 percent increase in foreign investments, the 400 percent growth in Philippine Economic Zone Authority (Peza) investments and reopening of the $13.8 billion National Steel Corporation in Iligan City, which she stressed are signs of the country's "sound economy."
Bunye added that the assessment was exaggerated.
No measure needed
Arroyo believes that the economy is sound and strong there is absolutely no sense in extreme scenarios vis-à-vis the peso sinking to an all-time low of P56.20 to the dollar and adverse speculations following it.
"We can all help by staying calm and focusing on constructive economic endeavors and dealing with the effects of the oil price hike in the spirit of sacrifice and solidarity," the President added.
She said the Department of Trade and Industry and Department of Agriculture are working with local government units in keeping a close watch on prices of basic commodities.
The Land Transportation Franchising Regulatory Board is in close dialogue with leaders of transport groups on fare hike issues, she added, hoping "that a common ground is reached that will be in the best interest of the transport industry and our commuters."
Meanwhile, the central bank said it was prepared to adopt appropriate monetary policy measures in view of the peso's weakness.
"We will continue to monitor the impact of exchange rate movements on future inflation. If the inflation target is at risk, we will have to take appropriate measures," said central bank deputy governor Amando Tetangco.
Monetary authorities could either raise interest rates or increase banks' reserve requirements to mop up excess liquidity feared to be used in currency speculation.
Last Tuesday, the central bank said foreign exchange transactions of banks were being scrutinized ahead of the May polls.
Banks stand to lose their forex trading licenses after three major violations, although there has been no evidence to suggest they have engaged in speculative trading, officials said. JMR |
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