Bangko Sentral offers to sell dollars to gov’t

12:26 am | Saturday, August 25th, 2012

The Bangko Sentral ng Pilipinas, which is managing the country’s nearly $80 billion in foreign-exchange reserves, is offering to sell dollars to the national government.

According to the BSP, buying dollars from the central bank would be a more prudent move for the government than borrowing dollars from foreign creditors.

The Aquino administration still has to raise $750 million this year to pay maturing obligations and meet its expenditure requirements denominated in dollars.

BSP Deputy Governor Diwa Guinigundo said that instead of borrowing $750 million from foreign creditors, the government could borrow an equivalent peso amount from the local capital market and use the proceeds to buy dollars from the BSP.

Guinigundo said that with the country’s huge foreign-exchange reserves, the government need not rely so much on foreign creditors. He said buying dollars from the BSP would benefit the government, the central bank and the economy.

By buying dollars from the central bank and avoiding borrowing from creditors abroad, Guinigundo explained that the government would free itself from foreign exchange risk such as when the peso depreciates.

The BSP also stands to benefit if the government will buy dollars from the monetary agency because the BSP, which incurred a net loss of about P33 billion last year, would avoid interest payments. If the government borrows from abroad, it is expected to temporarily deposit the funds with the central bank, which, in turn, has to pay interest on the deposits.

Guinigundo said the economy would also benefit should the government decide to buy dollars from the BSP as the economy would avoid additional inflationary pressures that might be created by the inflow of funds from abroad into the domestic economy.

“The BSP, time and again, has indicated its readiness to sell dollars to the national government,” Guinigundo told reporters Friday.

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Tags: Bangko Sentral ng Pilipinas , Business , forex reserves

californiaflip

If you borrow from abroad, the gov’t officials get to travel abroad, get overseas per diems and perks from the overseas banks. Kung umutang sa local market, payat yung kita.
robrano

That is one way to hold the peso at its stupid overvalued rate which has no basis at its low local purchase power. 44 to one dollar? 55 would be much more real and it would also boost export, tourism and local economy with the increased purchases of the millions of OFW families. But now they are the milked cows hat have todeliver cheap dollars to the government. OFW is moden time hero? No, modern times stupid sheep to be haircut by the government which then buasts of “good governing”. In fact, the admin bleeds the local money and uses it for corruption while local buiness can not create more jobs due to lack of affordable funds.
No wonder with a president who graduated in economy and was not even able as an Ateneo graduate to succeed in any business or job.

MindfulofToday

Economics, idiot!

During the 1970′s the dollar exchange rate is actually P 2 to USD 1~

And at that time the economy is the second largest in Asia~

Only next to Japan~

At that time, the Philippines is a Rice exporter~

Major companies such as Intel and other IT corporations once had their base of operations here in the Philippines~

The only reason that made the Dollar rose to peak levels is that the Philippine economy has been lagging behind all of its neighbors~

Also, the exchange rate of dollars and other foreign currencies are not the only factors that affect Philippine exported goods~

Why not try entering school again~

It’s obvious you’re just saying what you watched on TV~

Idiot~
http://profile.yahoo.com/YROCWERZ3GAQNWYZ25KJTBXCVQ Td

How would you also like to pay for diesel and gasoline at 55 to a dollar? We import most of our fuel and buy it in dollars.
http://profile.yahoo.com/FGLCSWEISCSAYRSODQ7MEOWLNI yahoo-FGLCSWEISCSAYRSODQ7MEOWLNI

I think you are an OFW beneficiary that is why you want the dollar to reach 55. What a stupid idea, good for you that just sits your butt and waits for your allowance. How about those who are not OFW beneficiary? They will be the one who suffers most with the increase of all basic needs.TNGA ka talaga.
marvingaboysantiago

The outcome in case 55 to a dollar is catastrophic to our economy…. Better to read more on inflation, and its effects to the buying public….

arao_liwanag

Who is the owner of the Central Bank of the Philippines (CBP)? Isn’t it stupid that the owner borrow from itself or other foreign banks and pay interest when you have your money in reserve currencies. One day the people will just be informed that the CBP is not own by them or will be privatized. Mga manloloko at magnanakaw sa legal na paraan kuno.

Calling the puppet Congress to investigate. Baka masuhulan na naman

MRFforPH

tanga ka! HAY NAKU

arao_liwanag

Sino ang tanga? Ikaw na di nga makabuo ng isang wastong pangungusap tulad din ni noy noy.

binatangtagabukid

wapak!

rickysgreyes

The banks are already actually lending to the government each time public bonds are issued by the RP Bureau of Treasury. The bonds are sometimes issued onshore or offshore in FX denomination (sometimes peso denominated, lately)and are ‘gobbled up’ by the banks. (chuckle) These banks are literally ‘laughing their way to the bank’ by of offering savings deposits of 1% to you readers, getting your money, and lending to the government (by buying bonds) at 7-10%.
http://pulse.yahoo.com/_AIPSCQM2TZQUMQ5GEIMWMWDFL4 Edward Solilap

What an interesting subject so why nobody from the government had ever thought about it before? The BSP is losing money with the exchange rate and nobody care to buy dollar from this institution why? something wrong with these people managing the central bank foreign currency.

robrano

BSP is not so much losing because they get billions in foreign currencies from the OFW remittances. And with the extreme overvalued peso they get it very cheap.

mcgyver67

The main job of the CB is to stabilize the peso and tame inflation. It incurred losses last year because it was forced to buy the excess dollars in the economy to keep the peso over-appreciating. This is to protect our exporters and in the end, our economy.
mcgyver67

The Central Bank (CB) lost so much to buy dollars. Remember, the OFW dollars are not own by the CB. These are OFW money. The CB bought the dollars to prevent the peso from appreciating too much. They bought the dollars at a much higher rate to lure the dollars owners (banks, corporations, individuals) to sell to the CB.
http://pulse.yahoo.com/_CKBW2BZX34JXQUSVAMZVKCLNAU TagaDumantay

CB sell dollar to prevent peso to appreciate or buy dollar to prevent peso to depreciate abruptly.

californiaflip

If you borrow from abroad, the gov’t officials get to travel abroad, get overseas per diems and perks from the overseas banks. Kung umutang sa local market, payat yung kita.

Bangko Sentral offers to sell dollars to gov’t

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