The Bangko Sentral ng Pilipinas has again eased the rules on foreign exchange to give the public wider access to the enormous dollar resources kept in the country’s banking system.
Also, the liberalized foreign exchange rules are expected to help tame a strengthening peso by making it easier for people and companies to bring foreign currencies out of the country and tempering the effect of foreign currency inflows on the exchange rate.
“The decision of the Monetary Board to approve further liberalization of existing foreign exchange regulations aims to simplify foreign exchange transactions of the general public with banks,” BSP Deputy Governor Nestor Espenilla Jr. said in a briefing.
This is the sixth time since 2007 that the BSP eased foreign exchange rules. The last such action was done in 2011.
“Now, residents can buy higher amounts of foreign exchange to meet the costs of various things, like education and medical bills incurred offshore or the cost of foreign travel without need for supporting documents,” the central bank official said.
Wilhelmina Mañalac, the central bank’s managing director for international sub-sector, detailed the six new rules on foreign exchange.
First is the increase in the amount of foreign currencies that may be bought by residents from banks and other foreign exchange institutions without documentary requirements from $60,000 to $120,000.
Second is the increase in the amount of foreign exchange that may be purchased using unspent pesos by foreign tourists or “balikbayans” without documentary requirements from $5,000 to $10,000.
Third is the expansion of the list of allowed sources of funding of a peso account that a foreigner may open. This will include income earned in the Philippines.
Fourth is the expansion of list of foreign assets that Filipinos may buy and for which foreign currencies may be used. This will include global and mutual funds, unit investment trust funds, real properties, debt securities issued offshore by residents and are part of asset inventory of local banks, and equity securities issued by residents that are publicly listed abroad.
Fifth, the regulator will allow banks to sell foreign exchange to investors who want to convert their investment fund plus the corresponding interest earned back in the original currency.
Sixth is the two-year extension, or up to Dec. 28, 2016, of the temporary rule allowing locals to borrow foreign currencies from banks without prior BSP approval for the purpose of funding projects under the public-private partnership (PPP) program of the government.
According to Mañalac, the liberalization of foreign exchange rules will also discourage people from going to the black market for their foreign exchange needs.
The flow of foreign currencies to the Philippines, led by remittances, foreign portfolio investments, and investments in the business process outsourcing (BPO) sector, has been on the rise.
The inflows led to the peso’s sharp appreciation which, last year, strengthened by 7 percent against the US dollar to become one of the fastest-rising currencies against the greenback.