The Philippine central bank BSP is ready to infuse liquidity should the domestic financial market continue plummeting due to the current turbulence in the U.S. economy, a government official said on Tuesday.
The slowdown in the United States might be protracted and affect the Philippines' exports and investment inflows, said BSP Governor Amando Tetangco, quoted by the Philippine News Agency.
The U.S. economy is now suffering from negative developments started by mortgage crisis in the second half of 2007.
The White House formulated a 700 billion-dollar package to save troubled banks from further degradation by buying their bad assets. However, the proposal was rejected by the U.S. Congress on Monday.
The junking of the plan resulted in a "market's knee-jerk reaction" in the Philippines, Tetangco said.
Local currency peso as well as stock prices on Tuesday "both opened weaker but subsequently recovered some of their initial losses," he added.
The peso opened at 47.10 against the greenback, dipped to 47.45 but strengthened to 47.03 before reaching its closing rate.
"A resolution should be forthcoming as the U.S. Congress realizes the global significance of its actions," Tetangco said.
"We will continue to monitor developments and activities in the
financial markets to ensure that our assessments are fresh and see if further action on our part is needed, including providing liquidity as necessary," Tetangco added.
Earlier, Tetangco said that the Philippine economy remains sound despite an unfolding global financial crisis, and domestic liquidity is adequate, with steady inflows of dollars from overseas Filipino workers.
"The country's macro fundamentals remain sound and the economy has proven to be resilient," Tetangco said.
He said strong remittances averaging over 1 billion dollars a month from Filipinos working overseas and dollar inflows from foreign parent firms of outsourcing and call center companies are keeping the peso strong.
The peso has lost 12 percent so far this year, one of the region's major laggards, and is reversing its record last year as Asia's best performer.
"The market may be experiencing some friction lately in terms of distribution, but I believe the market would be able to sort this out," Tetangco said.
Source: Xinhua
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