Council reviews creation of yen account

CEBU, Philippines - The Cebu City Council is reviewing the proposal of the City Treasurer’s Office to create a yen account that would convert over a billion pesos of the city’s funds into yen to protect the city from currency devaluation losses.

During yesterday’s session, the council summoned city treasurer Ofelia Oliva to discuss her request for authority to open a yen account.

The move will involve over P1 billion of the city’s funds to be converted into yen and deposited to one of its depository banks.

Oliva said this will protect the city from possible losses every time there is currency devaluation.

“If, for example, mo-increase ang value sa yen by the time mo-due atong loan in August, then dili modaghan ang peso na tong ipagawas,” Oliva said.

She said they are trying to avoid the same scenario when the city’s loan ballooned to P6 billion from the original P3 billion due to the devaluation of peso.

“It is better to pay in yen since our loan is in yen. We are also advised that it is better to hedge now,” Oliva said.

She said another reason for creating a yen account is the fact that yen is the world’s third strongest currency next to US dollar and the euro.

The City Council will discuss the matter once a report from the committee on finance regarding the proposal is done.

Meanwhile, the council sought for a thorough study on the recommendation of the treasurer’s office to accept the proposal of United Coconut Planters Bank (UCPB) as one of the city’s depository banks.

Oliva sought for the approval of the council to deposit a portion of the city’s funds in UCPB, which was recently accredited by the government as one of the authorized depository banks.

The council agreed that the proposal needs to be reviewed first to check on the reliability of UCPB as a precautionary measure should the bank face crisis in the future.

Councilor Jun Pe questioned why UCPB is chosen among other major banks since it is a smaller company compared to Metrobank, among others.

But Oliva explained that UCPB is offering the city a high yield of interest at 3.5 percent compared to other banks. — Jessica Ann R. Pareja/LPM (THE FREEMAN)