(AFP) Philippine President Gloria Arroyo wound up her first foreign trip today, expressing strong admiration for Prime Minister Dr Mahathir Mohamad and warning currency speculators she may consider Mahathir-style measures to protect the peso.

Arroyo also said she would consider negotiations to bring the Abu Sayyaf bandits plaguing southern Philippines into the fold of law, but ruled out talks on ransom payments.

Calling Mahathir a "brother" to the Philippines for helping broker peace talks between Manila and Muslim separatist rebels, Arroyo lauded the former's "plain talking and common sense".

"He has the right blend of pragmatism, vision and management capability," Arroyo, 54, said of the 75-year-old Mahathir, one of the world's longest-serving leaders.

"He has been a brother to us, a brother to me, helping out in bringing the peace process as far as it has done in this particular visit."

Arroyo stressed the "principle of non-intervention" in local politics, saying she would not meet the wife of jailed ex-deputy premier Anwar Ibrahim unless Mahathir approves it.

Former Philippines president Joseph Estrada irked the government when he met Anwar's wife during a visit here to show support for the politician.

"Being a guest of the prime minister, if he so much as hints he will not be happy, I will not go through with it. That is what I would do," she told a media interview before leaving for the airport.

Taking the lead

Arroyo, a US-trained economist, said she was not ruling out using a fixed exchange rate or currency controls as Malaysia did in 1998 to protect the battered peso.

"I don't envision it but I don't want to rule it out -- a la Mahathir...let the speculators be warned," she said.

"I believe the fundamental value of the pesos is 50 pesos to the dollar. I have urged central bank to make sure that value is protected and returned to within the year."

The peso closed yesterday at 53.15 pesos to the dollar from 53.32 pesos on Tuesday.

Currency curbs have protected Malaysia from financial instability during the 1997-98 Asian economic crisis but critics say it has led to distortions which could be harmful in the long term.

Arroyo said her government would focus on development in the southern Philippines following a formal ceasefire pact signed here on Monday between Manila and the Moro Islamic Liberation Front (MILF).

The MILF also sealed a unity pact with the Moro National Liberation Front (MNLF) from which it split in 1978, to forge peace in the south.

"We must make this ceasefire work and we must use this ceasefire to have development ... the final settlement is of secondary importance."

No to ransom

Arroyo said law enforcement had been stepped up to check kidnappings, including stationing a security contingent on every island especially in the south.

She ruled out ransom talks with the Abu Sayyaf, which is the only Muslim militant group still fighting in southern Philippines and now holds 21 US and Filipino hostages on Basilan island.

"Negotiating for coming into the fold of the law, that's all right but negotiating for ransom, that's ruled out," she said.

Asked if she would contest the presidency in 2004 elections, Arroyo merely said: "I am eligible".

Arroyo, who took office in January after Estrada was ousted by a military-backed popular revolt, said "people's power" would not become a permanent feature of her country's democracy.

"It will not unless dictatorship and plunder become permanent features of the Philippines, which they are not," she said.

She summed up her workstyle, saying: "God takes care as long as you try and do your best. I'm not aiming to be a great president. The important thing is to be a good president".

Arroyo left for Davao after a three-day historic visit, the first by a Philippines leader since 1993.