MANILA, Philippines – The national government may prepay some of its foreign currency-denominated debts in the wake of a rising peso, a ranking official said.

“We are studying it,” National Treasurer Roberto B. Tan responded to a mobile message sent to his mobile phone seeking for comment on possible debts prepayment.

Bangko Sentral Governor Amando M. Tetangco Jr. announced last Friday that the government is looking at prepaying some foreign debt to help moderate gains in the peso, which has already breached the P43.5 to a dollar mark.

Tetangco said that in times when the local currency is strong, prepayment becomes a good debt management strategy.

Data from the treasury bureau showed that the government debt reached P4.605 trillion at end-July and about P1.978 trillion or 42 percent is owed to foreign creditors.

The peso has appreciated by more than 3.7 percent against the dollar since late August, making it a clear outperformer in the Asia Pacific region in recent weeks.

London-based investment bank Barclays Capital has projected that the peso will strengthen further to 42.5 against the dollar within the next three months and up to 40 within the next 12 months.

In 2007, when the peso was strong, both private and government entities accelerated the settlement of their foreign debts before maturity, with total prepayments reaching $3 billion, the highest level since the Asian financial crisis. A strong peso makes foreign-currency obligations cheaper.

Some exporters and overseas Filipinos are already calling the BSP to intervene more in the foreign exchange market to deliberately weaken the local currency.

Analysts, meanwhile, explained that the strong peso came amid a robust increase in foreign portfolio inflows, mainly in the form of investments in the country's stock market.