Financial markets unshaken by tough Duterte rhetoric: Tetangco


Posted at Sep 06 2016 01:28 PM | Updated as of Sep 06 2016 05:27 PM

Philippine President Rodrigo Duterte (2nd R) arrives for the ASEAN Summit in Vientiane, Laos September 6, 2016. Soe Zeya Tun, Reuters

MANILA – (UPDATE) The currency and equities markets have been largely unaffected by President Rodrigo Duterte’s biting remarks and unclear policy pronouncements, Bangko Sentral ng Pilipinas Governor Amando Tetangco said Tuesday.

Duterte’s profanity-laden rebuke of US President Barack Obama forced the White House to cancel their meeting in Laos and over the weekend, his officials gave conflicting statements on the scope of a “state of lawlessness” that he declared after a deadly bombing in in Davao City.

Tetangco said news of a possible interest rate increase by the US Federal Reserve was influencing market movement, not Duterte’s recent pronouncements.

“We have not seen any negative market reaction,” Tetangco told reporters.

“The market will be influenced more by what the Fed will do and what the other advanced economies will do. It’s gonna be more externally-driven at this point,” he added.

The Philippine Stock Exchange Index was down 0.63 percent to 7,715.55 while the peso averaged 45.594 in morning trade on Tuesday.

“What we would need is to explain better what the objectives of the policies of the government are,” Tetangco said.

Before he left for a working visit to Southeast Asian nations on Monday, Duterte signed a declaration of a “state of national emergency” due to “lawless violence.” His aides had differed over the weekend on whether it covered only Mindanao or the entire nation.

He also threatened to curse at Obama if the US leader raises his bloody war on drugs if they meet in Laos. Some 2,000 drug suspects have died since Duterte assumed office on June 30, raising alarm among human rights monitors.

The killings, the slur at Obama and the explosion have been on investors minds, and if left unaddressed, could affect the long term, said ING Bank Manila senior economist Joey Cuyegkeng.

"We believe that such political developments and concerns if unchecked would have more profound impact on markets and the economy," he said.

"For now, the impact is likely to be marginal and is likely to be offset with favorable macro-economic fundamentals - structural inflows, high FX reserves, strong domestic demand and monetary and fiscal leeway," he said.