Philippine economy sound, liquidity adequate

The Philippine economy remains sound despite the global financial crisis and steady inflows of dollars from overseas Filipino workers are helping keep domestic liquidity adequate, the central bank chief said on Monday.
The country's banks have limited exposure to the collapse of Lehman Brothers, a factor helping contain any large swings in domestic markets, said Amando Tetangco, the central bank governor. The central bank is also keeping a tight watch over the local currency market to manage wild swings in the peso.
"The country's macro fundamentals remain sound and the economy has proven to be resilient," Tetangco told a Senate hearing. "We have sufficient liquidity from other sources of foreign exchange." "The central bank continues to be in both the spot and swap FX markets, as part of our normal operations to help smoothen volatilities in the exchange rate," Tetangco later told reporters.
"We shall also continue to closely monitor developments to see if any further action is necessary on our part," he said, adding that the FX swap market was under some pressure the past two weeks as banks reviewed their credit standards and dollar positions due to the financial turmoil.
Remittances from overseas workers, averaging more than $1 billion a month, and dollar inflows from the foreign parent firms of outsourcing and call centre companies, were supporting the peso. The peso is one of Asia's worst-performing currencies this year against the dollar, having dropped 12 percent.
The Korean won is down more than 20 percent and the Indian rupee 16 percent, while the Singapore dollar, Indonesian rupiah and Malaysian ringgit have fallen between 0.6 percent and 4 percent.
Asian central banks have intervened aggressively in the currency markets this month to defend their falling currencies as the global financial crisis deepens. Tetangco expressed confidence that the planned US bailout that goes to congressional votes this week would support financial markets. "As soon as the details come out, that should have a positive impact on financial markets and the peso dollar market," he said.