BANGKO Sentral ng Pilipinas Governor Amando Tetangco Jr. downplayed any significant financial impact of an international tribunal’s ruling that favored the Philippines over its terriorial dispute with China in the West Philippine Sea.
Tetangco said at the sidelines of an event at Bangko Sentral Wednesday the markets were more worried about developments elsewhere, such as in the US and Japan.
“I guess what markets are looking at is how China will react to this decision. Markets are reacting to developments elsewhere,” Tetangco said.
“Looking at the behavior of the markets today, the conditions here continue to be more affected by developments in US and Japan. For instance, in the case of exchange rate, the peso opened stronger this morning compared yesterday [Tuesday] and that was because of the improvement in sentiment given the announced additional stimulus to be provided by the Japanese government,” Tetangco said.
The peso opened Wednesday’s trading at 47.22 against the greenback, 16 hours after the milestone ruling. It was stronger than 47.35 at the opening of trade on Tuesday.
Tetangco also said the US Federal Reserves seemed “not in a hurry to tighten interest rates.”
“Remember at the beginning of the year, we expect four increases. Some Fed officials are now saying there will only be one hike. So the peso is being affected more by developments in the US and Japan,” he said.
The International Tribunal on the Laws of the Sea based in The Netherlands on Tuesday ruled against China in a bitter row over territorial claims in the South China Sea, or West Philippine Sea. The court concluded that there was no legal basis for China to claim historic rights within the sea areas falling within the so-called “nine-dash line.”
Earlier, ING Bank Manila senior economist Joey Cuyegkeng said in a report prior to the landmark decision that it would not unduly create significant sustained volatility in the domestic financial markets.
“But both nations have sent signals they would be open to bilateral talks about the contested area. The new Philippine administration has been clear that the next step is for negotiations,” Cuyegkeng said.
“Meantime, near-term volatility cannot be swept aside. We believe that it would be limited and could be fleeting as long as Philippine and China reiterate willingness to dialog,” Cuyegkeng said.