BSP further eases forex rules

The Bangko Sentral ng Pilipinas has further relaxed its foreign exchange regulatory framework, making it easier for the public to buy and sell foreign currencies.

The move, which is expected to help improve the country’s investment climate, is in response to the growing need for faster trading of foreign currencies given the rising business activities in the country, the BSP said.

“The Monetary Board of the BSP approved several amendments to existing foreign exchange regulations as part of the continuing efforts to keep the foreign exchange regulatory framework attuned with current economic conditions,” the BSP said in a statement.

Under the new rules, the list of transactions for which foreign exchange may be purchased from banks even without approval of the BSP has been expanded.

The list now includes the following: lease of foreign-owned equipment, refund of unused foreign loans or grants, payment for underwriting fees owed to foreigners for initial public offerings of local equities, and settlement by Philippine Deposit Insurance Corp. of depositors’ claim of foreign currency-denominated deposits in banks that have ceased operations.

The new rules also provide that authorized agent banks may sell foreign currencies to clients who want to make advance payment of imports, regardless of amount, without prior approval of the BSP.

Moreover, securing of foreign loans to fund infrastructure projects prioritized by the government, particularly those under the so-called Public-Private Partnership (PPP) program, no long requires prior approval by the central bank.

The new rules likewise lift documentary requirements for remitting earnings and dividends from investments offshore, and for converting foreign exchange into pesos for purposes of direct equity investments.

In the meantime, the BSP  said that between December 2011 and February 2012, foreign currencies  may be purchased from authorized banks for purposes of paying foreign loans that are not registered with the BSP.

Previously, the purchase of foreign currencies to pay for unregistered loans was not allowed.

The foreign loans covered are those outstanding as of June 30 and are due between December 2011 and February 2012.

These revisions of the BSP rules followed the adoption of certain measures aimed at liberalizing the country’s foreign exchange regulations.