FATE OF PESO UNCERTAIN DUE TO REBEL ACTIVITY - BSP
Manila, July 28, 2003 By Des Ferriols (Star) The Bangko Sentral ng Pilipinas (BSP) said yesterday currency trading at the Philippine Dealing System (PDS) will be suspended today if major banks headquartered in Makati are unable to operate their systems due to the on-going coup attempt.
Market analysts have been speculating all afternoon yesterday that the peso could plummet to as low as 56 to the dollar when trading opens at the PDS today.
But BSP Governor Rafael B. Buenaventura said the BSP will be watching closely the foreign exchange market for speculators.
As of 5 p.m. yesterday, Buenaventura’s official position was to wait for the outcome of the rebellion and its anticipated impact on the peso, especially since President Arroyo has agreed to extend the deadline indefinitely.
When asked whether the BSP would suspend trading today, he only said: "Let’s see."
According to the BSP chief, it is possible for Makati employees to not show up for work Monday and this would prevent the PDS from trading at all.
"If people are too afraid to go to work tomorrow ([Monday], then we might suspend trading," he said. "Remember, its also a matter of being able to run the trading system at all, with all computers on line to resume normal trading."
However, Buenaventura pointed out that most of these banks are in Makati, the center of the on-going rebellion. "We have been asking banks to set up back-up system but not all of them have it," he said. "Not all of them will be able to operate their trading system from back-up locations."
According to Buenaventura, however, the BSP was prepared to provide the market with liquidity should there be a need.
Buenaventura said he has been consulting with the Bankers Association of the Philippines (BAP) all day yesterday but no one was able to make a conclusive assessment of how the market would turn out today.
"The situation is far too fluid for speculations right now, everyone will have to play it by ear until this is all over," Buenaventura said.
According to Buenaventura, the BAP has made a commitment to maintain normal banking operations today, except in bank branches directly affected or within the immediate vicinity of the incident in Makati.
Buenaventura said the BSP was ready to provide cash should banks need it. "We will make sure that banks and their ATMs (automated teller machines) have sufficient cash for the convenience of the public," he said.
Buenaventura said the BSP was on the lookout for excessive speculation although he admitted that there would be a lot of tension in the market, coming out of the developments over the weekend.
"In any case, we will be ready to provide liquidity," Buenaventura said. "We’ll be making sure that no one is speculating. The situation is certainly bad enough without everyone speculating."
Reported by: Sol Jose Vanzi
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