Philippines President Benigno Aquino asked Central Bank to open up to growing currencies, and start changes in the country's dollar-based economy, as his financial experts weighed losses and gains following a scrutiny of the economic woes in the United States (US), an ally, a local paper and other sources said.
The country's dollar-based foreign reserves must be checked, Aquino told the Star, indicating the importance of changing Central Bank's policy to make it open to "a broader basket of currencies… (since) there is an old saying that you don't put all of your eggs in one basket."
Earlier, Philippine finance secretary Cesar Purisima said the dismal economic developments in the US, "highlights the need for alternative global reserve currencies and benchmarks that are more stable and as liquid and convertible". He did not give details.
Instead, he asked for more transparency from Washington, long time issuer of debt instruments and reserve currency.
A balancing act is important, explained Central bank Governor Amando Tetangco who revealed that Central Bank has raised on July 28, banks' reserve requirement in order to avert already massive circulation of foreign funds in the Philippines.
This was to ease up inflation, which averaged 4.3 percent from January to July 2011, and could go higher than the parameter of 3 to 5 percent ideal range in 2011, Tetancgo argued.
Nevertheless, Aquino looked forward with optimism, saying, "Investors who will invest in the long-term, will see the advantages of investing in the country…If it is profitable to do business here, it will remain to be profitable (regardless of what is happening in the US)."
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"But we should be prepared for the worst-case scenario which is recession in US and Europe," warned Congressman Juan Edgardo Angara, as he called for identification of industries and institutions affected by the weakening of the dollar and the peso.
This could affect the growth and income of Philippine call centres of the sunrise Business Process Outsourcing (BPO); the earning of Philippine exports; and the value of an estimated $ 18 billion remitted by about nine million overseas Filipino workers (OFWs) to their loved ones in the Philippine every year, experts said.
The National Statistics Office (NSO) reported that Philippine exports to the US (former 1st destination) fell by 23.1 percent, including the Hong Kong, and Singapore markets (initially 4th and 5th destinations), but Philippine exports to Japan and China rose to 41.1 percent and 18.8 percent respectively, making Asian markets as better destinations.
Products with lowering markets were ignition wiring sets, coconut oil, and metal components; products with growing markets were bananas, copper, gold, furniture, and petroleum products, NSO said, adding that export woes were due to the economic slump in the US and the European Union.
The sagging economy in the US, which hosts majority of OFWs, could really affect the flow of deployment of OFWs, in general, the labour department said.
At the same time, Philippine Congressman Danilo Suarez called for disclosure from government-owned and controlled corporations (GOCCs) and government financing institutions (GFIs) on investments on US bonds holdings, adding their values have already diminished.
Suarez fears rose as the US Treasury has confirmed the Philippines holds $23.6 billion in US securities.
Philippine private banks should likewise divulge such investments since some of them suffered when Lehman Brothers, one of the world's largest investment banks, declared bankruptcy in 2008, other finance groups said.
Earlier, Standard and Poor's has downgraded US's once enviable credit ratings of triple A, to double A with a negative outlook.