Philippines to weather ‘Grexit’—Bangko Sentral
Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. INQUIRER FILE PHOTO
Equity and currency markets in the Philippines may be in turmoil in the coming days following the collapse of negotiations between Greece and its creditors this week.
The immediate effects of Greece’s potential exit from the euro zone may spell losses for investors.
Looking further down the road, emerging markets like the Philippines are still expected to perform well, owing to buffers that were built up in past years.
“The developments in Greece may cause volatility in financial markets, as some participants shy away from positions until there is clearer direction in the next steps in the European Union,” Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said in a text message to the Inquirer.
On Monday, Greece announced it would implement capital controls to protect its banking sector, which was deprived additional emergency financing by European Union creditors and the International Monetary Fund (IMF).
Athens said it would restrict bank withdrawals in the coming days to prevent a collapse of already cash-strapped Greek banks.
With heightened risk aversion globally, the peso on Monday opened at 45.20-to-$1, down from its 45.085: $1 close on Friday.
Tetangco said the Philippines should be able to weather the current global crisis using the same buffers that insulated the domestic economy from past spells in recent years.
“Asian emerging market economies may be affected by thus, but there is fundamental robustness in domestic economies, including in the Philippines, that should help shield us from any fallout,” the BSP chief said.
The Philippines boasts of high levels of dollar reserves, and Southeast Asia’s most cash-rich banking system. Despite a slowdown in the first quarter, the Philippine economy also remains one of the best-performing in the region.
