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Posted on April 18, 2013 11:27:57 PM
By Diane Claire J. Jiao, Senior Reporter
Bangko Sentral eases foreign exchange rules
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FOREIGN EXCHANGE rules have been eased further to encourage dollar purchases, with the Bangko Sentral ng Pilipinas (BSP) aiming to address capital inflows that have led to a sharp peso appreciation.
“These changes will simplify transactions between the banks and the general public and encourage them to shift from the informal market into the banking system,” he added.
Yesterday’s announcement marked the sixth in a series of forex liberalizaton measures made by the BSP since 2007. The latest changes allow for larger over-the-counter foreign currency purchases and more investments abroad without the need for documentation or central bank approval.
Residents can now purchase up to $120,000 per transaction from banks, double the $60,000 previously.
This was prompted by an increase in demand for foreign currencies for “non-trade” purposes such as education, medical services and travel abroad, central bank Managing Director Wilhelmina C. Mañalac said.
“The trend is going up. The demand totaled about $1.4 billion as of October 2012 from only $800 million in 2008,” she added.
“We expect it to climb even more this year. As the economy grows, more people have the purchasing power to avail of goods and services abroad.”
Tourists and returning Filipino migrants will also be allowed to buy up to $10,000 with their unused pesos when they leave the country, twice the $5,000 allowed previously.
The central bank retained a $60-million cap on the amount of dollars that residents can purchase per year for investments abroad. It expanded, though, the areas where these investments can be made.
These include offshore mutual funds and unit investment trust funds; inter-company loans between residents and offshore parent companies or subsidiaries with a minimum tenor of one year; real property, including condominium units; debt securities issued offshore; and equities issued by residents listed abroad.
Prior to the change, investments could only be made in equities and debt securities issued offshore by residents and the Philippine government.
Foreign exchange rules for non-residents were likewise liberalized by the BSP.
Onshore peso deposit accounts can now be created by non-residents with onshore peso receipts for services rendered to residents; expatriates with onshore peso receipts for salaries, allowances and other benefits; foreign students with onshore peso funds; and non-resident Filipinos with onshore peso funds.
Previously, non-residents were only allowed to create onshore peso deposit accounts from foreign currencies brought into the country or from the peso proceeds of the sale of their properties in the Philippines.
Banks will be allowed to convert these peso deposits into foreign currencies, capped at $60,000 a day.
Non-residents will also be allowed to convert all their peso investments -- including interest -- to foreign currencies at prevailing exchange rates, as long as at least 50% of the amount was duly registered and invested in the Philippines.
Before this, non-residents could only convert money left over from investments.
The central bank also opened a temporary window for residents to pay any unregistered foreign loans using foreign currencies bought from banks. The window will cover loans falling due from May to December 2013. The BSP expects to receive some $1 billion in payments from the temporary window.
Central bank Deputy Governor Diwa C. Guinigundo had signalled a fresh easing of forex rules last February, saying the new wave will encourage dollar outflows, balancing out a strong influx.
The Philippines has been on the receiving end of capital flows as foreign investors flock to emerging economies in search of better returns. The peso subsequently saw a sharp appreciation, gaining by 6.8% against the dollar in 2012 and closing the year at P41.05 -- well above the BSP’s P42-45 assumption.
The peso started 2013 strongly, trading in P40:$1 territory. It has fallen to P41 per dollar territory recently, however, amid bad news that includes a slowdown in remittances and Monday’s Boston bombings.
It gained three centavos to P41.22 yesterday, with traders citing investor purchases of local assets.
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