Bangko Sentral further deregulates forex regime

The Bangko Sentral ng Pilipinas (BSP) has unveiled a fresh wave of reforms in rules for foreign exchange transactions, in line with preparations to integrate Southeast Asia into a single economic unit by 2015.

In a statement on Friday, BSP Governor Amando M. Tetangco Jr. said the policy-making Monetary Board approved new rules for foreign exchange transactions, amending previous rules under the Manual of Regulations on Foreign Exchange Transactions.

“The measures will broaden investment options available in the domestic capital market and allow freer capital mobility,” the BSP statement read.

Among the changes include allowing the registration of custodian banks of foreign investments in shares listed on the Philippine Stock Exchange (PSE). The BSP also approved the conversion to foreign currencies of money made by foreign investors from the sale of locally-listed shares.

These two changes will pave the way for foreign investors to invest in foreign companies that are listed on the PSE.

The BSP will now also allow the prepayment of BSP-registered short-term loans. “This will facilitate access to the banking system for the legitimate transactions requiring payment in foreign exchange,” the BSP said.

Prepayment of short-term loans, or those that mature one year or less, was previously not allowed.

The new rules also simplify and reduce the reporting burden on banks. This is through the waiver of reportorial requirements for import transactions, provided that banks maintain adequate records that the BSP can verify if needed.

Tetangco said the approval of the new rules was an affirmation of the BSP’s “commitment to maintaining a safe and sound financial system, a stable foreign exchange market, and monetary policy supportive of economic growth.”