As the peso continued to falter against the dollar, the central bank, Bangko Sentral ng Pilipinas (BSP), has tightened its monitoring of banks’ currency deals with overseas investors in an apparent attempt to curb speculative pressures spilling over to the spot foreign exchange market.

The peso closed Tuesday at its intra-day low of 43.75 to the dollar, its weakest in six months, on lingering concerns on runaway crude oil prices.

Despite suspected intervention by the BSP, which was spotted unloading dollars to temper the peso’s fall, the peso shed another 0.17 from Monday’s closing rate of 43.58 to the greenback.

The volume of trading on the currency spot market rose to $595.5 million from Monday’s $405 million.

The BSP issued a memorandum requiring banks to report non-deliverable forward (NDF) transactions with offshore investors on a weekly basis, including the agreed peso-dollar exchange rate, volume and maturity of transactions.

Currency forwards refer to agreements to buy or sell a specified amount of foreign exchange for settlement at a specified rate in the future. In the case of NDFs, which played a big role behind the sharp currency swings during the Asian currency crisis, only the exchange rate differential is settled upon maturity.

At present, NDF positions are reported as a lump sum and as part of capital adequacy requirements. But starting from the week ended May 23, all banks and trust entities authorized to engage in NDF transactions with nonresidents are required to submit a detailed weekly report, according to the new memorandum, M-2008-019, issued by BSP Deputy Governor Nestor Espenilla Jr.

The authorities “want to control the NDF market because they realize now that it could be a threat,” a bank treasurer said.

Bankers said the peso-dollar NDF transactions, which are done over-the-counter, were growing. Some said the NDF volume would account for double or triple the daily foreign exchange positions of banks on the currency spot market. With editing by INQUIRER.net