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Alarmed over peso strength, BSP sets out to curb speculation


With the peso’s significant appreciation since the start of the year, the Bangko Sentral ng Pilipinas is now considering special measures to further curb speculation on the local currency.

According to BSP Governor Amando Tetangco Jr., the monetary authority plans to put a cap on banks’ holdings of non-deliverable forwards (NDFs), citing the need to secure the economy against the destabilizing effects of excessive foreign portfolio investments, particularly the speculative types.

“We are considering putting a macro limit [on volume of NDFs],” Tetangco told reporters Wednesday at the sidelines of a financial education forum held in Makati City and organized by Citi and Financial Times.

He did not cite a specific figure.

At present, there is no limit on the volume of NDF transactions that banks can engage in. But they are required to allocate a certain capital to cover their NDF holdings.

An NDF is a hedging tool that allows holders to buy currencies at a specified exchange rate and time in the future. This helps shield importers and exporters from losses brought on by foreign exchange volatility.

But the BSP believes some banks are trading NDFs to earn from speculation on the peso. Currency speculation may result in excessive volatility of the exchange rate and prove harmful to the economy, the central bank said. Putting a cap on NDF holdings is a straightforward move to curb speculation on the peso.

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Tags: Bangko Sentral ng Pilipinas , currencies , Peso , Philippines , speculation

  • http://profile.yahoo.com/AND7MQ5FERICDOIAUW56RYT45A tower_of_power

    Banking institutions found abusing rules on NDF’s must be penalized stiffly … like cancellation of their permits.

  • oh_noh

    tsaka anong “speculation” ang pinagsasabi nyo? totoo yang “pagmamanipula” nyo! *mga hinayupak*

  • oh_noh

    na -alarma kuno… pagkatapos kumita ng malaki sa forex!!! *at hihirit pa hanggang sagaran*

    sino ang inu-ulul nitong bsp!!! *kawawang ofw*

    dapat habang unti-unting tumataas ang piso, unti unti ring bumababa ang presyo ng mga bilihin… ang laki na ng nilakas ng piso, bakit sumasabay rin ang pagtaas ng mga presyo?

    mga negosyante talaga *haaaaaaaaaaaaayyyyyyyy*

  • http://www.facebook.com/people/Betz-Chui/100002310507085 Betz Chui

    The government should pay all its dollar debts using pesos as the exchange rate today is only 40 to 1 dollar! Konting Pesos lang ang kailangan ng gobyerno. Pag nabayaran ang malaking bahagi ng utang na dollars ng government……hihina ang Peso dahil mababawasan ang reserves natin ng malaki dahil ibinayad sa utang…..then the government can devaluate the Peso to 50, if not 55 to the dollar para masaya ang OFWs at BPOs. …bayad ang utang ng gobyerno with fewer pesos, and later 35% of Pinoys ( 10 million OFWs families and dependents, including 800 thousand BPO workers, and hundred thousand exporters) will increase there income by 20 to 27% instantly dahil sa devaluation!

    Later as OFWs will keep on sending dollars, and BPOs will continue expanding…the government can let the normal rise of the Peso from 55 proceed to whatever level say 35 to the dollar….

    • mr dt

      beside paying philippine govt debt with our reserve — my question what are you going to use to pay our monthly importation bills and other us dollar bill obligation ?

      • BawalAngReklamador

        Malamang NALIMUTAN nya isama sa kwentahan yun kabayan..

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