Japan move seen positive for Phl

MANILA, Philippines - The Bangko Sentral ng Pilipinas said Japan’s move to further provide fiscal stimulus to prop up its economy should be positive for the Philippines if this will translate to an increase in trade activity in the future.

“If the move translates to an improvement in Japanese market confidence and the expected growth in Japan materializes, then this move should be positive for our own trade prospects as Japan is one of our principal trading partners,” BSP Governor Amando M. Tetangco Jr. said.

The Bank of Japan (BOJ) on Friday announced it will raise its asset buying program to ¥80 trillion a year from the current ¥60 to ¥70 trillion annually. The move, which surprised financial markets last week, was executed as the Japan economy remains weak and inflation continues to slide.

Japan was the primary destination of Philippine exports last year, accounting for 21.16 percent of shipments, government data showed. At the same time, Japan was the Philippines’ third largest source of commodities in 2013, accounting for 8.46 percent of imports.

Tetangco said the policy move of the BOJ had an immediate impact in global financial markets, including those in the Philippines.

“In the case of the BOJ move on Friday, it caused regional currencies including the peso to weaken alongside the yen, although the peso recovered some of its losses towards close of trading,” Tetangco said.

The peso closed at 44.88 to a dollar on Friday, losing two centavos from its 44.9:$1 finish the previous day. It traded between 44.98 and 44.81 to $1 last Friday.

“We will continue to watch the actions of policy makers in the AE (advanced economies), as their divergence could create near-term volatility in our own domestic financial markets,” Tetangco said.

“In the FX (foreign exchange) market, we will maintain our policy of a market-determined FX rate, but will not hesitate to be present in the market should we see potential excesses in the market’s moves,” he continued.