UPDATE 1-Philippines not in midst of foreign exchange crisis - c.bank governor


* Says confident won't see freefall situation with peso

* Central bank in firm control of exchange rate

* Peso trading near 11-year lows vs dollar (Adds comments from governor, background)

MANILA, Aug 25 (Reuters) - The Philippine central bank is in firm control of the peso and is confident that the country is not facing a foreign exchange crisis, its governor said on Friday, as the currency hovered around 11-year lows.

"We allowed the peso to adjust moderately and gradually but I can assure you the BSP (central bank) is in firm control of the exchange rate," Nestor Espenilla told a business forum.

"We remain confident that we are not talking about a freefall situation. Definitely we are not in a foreign exchange crisis."

Espenilla said the Southeast Asian nation's economic fundamentals remain strong, inflation is under control and the country has ample foreign exchange reserves.

The central bank on Monday warned traders that it would intervene in the currency market to curb any speculative activity as the peso has slid to its weakest levels since 2006.

"Speculation will always be there. It's a constant battle to be able to maintain orderly conditions," Espenilla said on Friday.

The peso was down 0.2 percent at 51.089 to the dollar by late morning on Friday, not far off the 11-year low of 51.615 reached on Aug. 18.

It is Asia's worst performing currency so far this year, having weakened 2.7 percent even as other emerging Asian currencies have strengthened in the face of a weaker dollar.

Much of the pressure has been attributed to expectations that the Philippines could post its first current account deficit in 15 years this year. The government has forecast a deficit of $600 million, compared with 2016's $601 million surplus.

Espenilla, who took the helm at the central bank in July, has also said the currency's drop "reflects the nervousness of the world. All these nervousness, on a day-to-day basis, is translating to the volatility of the exchange rate."

But he said the exchange rate "needs to be flexible to allow market supply and demand to balance off in a controlled way."

Imports of capital goods - mostly infrastructure related - have surged as President Rodrigo Duterte's administration embarks on a six-year, $180 billion spending spree to modernize and build new airports, roads, railways and ports.

The construction boom has made the Philippines the second-fastest growing economy in Asia after China, with the government targeting expansion of 6.5 to 7.5 percent this year.

But Espenilla said despite rising imports, he doesn't see the current account deficit topping more than 1 percent of gross domestic product (GDP)

"We are not talking about a blowaway current account deficit," he said.

The country's main share index has surged 17 percent so far this year. (Writing by Manolo Serapio Jr.; Editing by Lisa Twaronite and Kim Coghill)