MANILA, Philippines?The Bangko Sentral ng Pilipinas has expressed concern over the decision of the US Federal Reserve to pump more liquidity into the US economy, saying such a move could aggravate the problem of a sharply rising peso.

BSP officials said a portion of the additional liquidity to be created by the US Fed is expected to go to the Philippines and other emerging markets in Asia in the form of investments in equities and other portfolio instruments. More upward pressure on the peso and other Asian currencies should thus be expected, they said.

?It may exacerbate what is going on in emerging markets, including the Philippines. Foreign exchange flows can be heavier and more destabilizing. There is more pressure building up [for] the peso,? BSP Deputy Governor Diwa Guinigundo told reporters.

With more liquidity in the US economy, interest rates in the US are expected to remain at very low levels, thus encouraging investors to place more of their funds in Asia, where yields are higher.

?With yields in the US expected to remain low for longer, the shift of global funds to emerging markets, including the Philippines, may continue,? BSP Governor Amando Tetangco Jr. said.

The US Fed has announced that it would buy $600 billion worth of new bonds and reinvest as much as $300 billion of its earnings from US Treasuries over the next eight months.