China, Philippines ink currency deal
( 2003-09-01 09:24) (China Daily)
China and the Philippines have signed a currency swap agreement and a
memorandum on provision of a preferential loan for a Philippine railway project
in the latest move to boost bilateral cooperation and safeguard regional
financial stability.
Philippine President Gloria Macapagal-Arroyo and visiting Chinese top
legislator Wu Bangguo witnessed the ceremonial exchange of the swap deal and the
signing of the memorandum of understanding at the presidential palace in Manila
on Saturday.
Under the bilateral currency swap deal between the central banks of the two
countries, China will provide as much as US$1 billion credit to the Philippines
when necessary to supplement rescue funds by international financial
institutions in order to help the Philippines solve balance of payments problems
and protect its financial stability.
The pacts make foreign exchange reserves available at short notice to a
country facing short-term international payment problems and whose currency is
under speculative attack in a bid to avert a financial meltdown similar to the
1997-1998 Asian financial crisis triggered by the sharp devaluation of the Thai
baht.
Such agreements are part of the Chiang Mai Initiative which aims to create a
network of central bank currency swaps among the 10 members of the Association
of Southeast Asian Nations plus China, Japan and South Korea.
Under the memorandum of understanding signed by the Export-Import Bank of
China and the Philippine Department of Finance, China will provide a
preferential buyer's credit of US$400 million to finance the construction of a
railway on Luzon island.
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