Bangko Sentral ng Pilipinas is evaluating currency restrictions, including possibly raising the P10,000 ($212) limit of local currency that can be taken in and out of the country by travelers, to boost trading.
“If we see that there are still restrictions that could prevent an otherwise vibrant cross-border trading, then we will address those restrictions or ceilings,” Deputy Governor Diwa Guinigundo said.
“We are about to present something to the board… Not sure if we are going to increase the amount but we are looking at it,” Guinigundo said at the sidelines of an event at Bangko Sentral Monday.
The bank’s international operations department would make the recommendations, he said.
Guinigundo, however, said raising the P10,000 limit of local currency that could be taken in and out of the country by travelers might require the amendment of several laws.
“There are laws covering that….We can’t do that without amending the law,” Guinigundo said. “One way of relaxing [the rules] is change the amount but that is something that we are looking at very carefully because there might be some legislative issues.”
Taking in and bringing out of Philippine currency in excess of P10,000 is prohibited under the Central Bank Act, unless the traveler was given authorization by BSP international operations department.
Bangko Sentral has implemented several vital currency reforms since 2007, including easing the rules for foreign-currency purchases and loans.
Bangko Sentrral Governor Amando Tetangco Jr. earlier said that transparency and flexibility in foreign-exchange transactions help the market plan better.
Since 2007, Bangko Sentral ng Pilipinas has implemented several waves of currency reform including easing rules for foreign-currency purchases and loans.
While the peso has fallen about 5 percent this year, it is still among the best performing Asian currencies with Indonesia’s rupiah and Malaysia’s ringgit losing more than 10 percent.
The peso closed at 47.13 against the US dollar Monday, down from 44.72 at the start of the year.
Tetangco earlier said transparency and flexibility in foreign-exchange transactions help the market plan better and from experience, these policies have helped the central bank better manage external vulnerabilities.
In February, Bangko Sentral approved further amendments to the regulations on foreign exchange transactions in a bid to build a sound financial system and stable forex market.
The regulator allowed the sale of foreign exchange, on spot and forward basis, by banks and affiliate forex corporations to residents, without prior approval from the bank regulator to settle net obligations or payables under inter-company netting arrangements.
Inter-company netting arrangements pertain to trade transactions such as import and export of resident entities with related foreign firms.
“The policy is expected to further facilitate legitimate trade transactions and will allow the BSP to better capture data on trade transactions through reporting of gross importations,” Tetangco said.
Bangko Sentral included as beneficiary of FX payments by Philippine residents for settlement of trade and non-trade current account obligations, the payment centers/treasury centers/hubs of a group of companies, subject to presentation to the FX selling institution of supporting documents evidencing the payment arrangement with the centralized settlement unit.
It said this amendment aimed “to hasten settlement of transactions among related entities considering current trends involving the use of a clearing unit for payments or financial transactions such as payment/treasury centers/hubs by members of a group of companies.”
The regulator also allowed the sale of FX to residents for settlement of their credit card obligations to resident credit card companies.
“This will address cases where obligations of residents to resident credit card companies incurred with non-residents as counter parties are billed and payable in foreign currency,” it said.
Bangko Sentral also exempted from the P10,000 limit on cross border transfer of Philippine peso the amount of peso refund to outbound passengers exempted from the payment of international passenger service charge.
It said the exemption would address the possible breach of the limit arising from the implementation of such refund.
Tetangco said the continuing review of foreign exchange regulations was consistent with its commitment to maintain a safe and sound financial system, a stable foreign exchange market, and appropriate monetary policy supportive of sustained and inclusive economic growth. With Julito G. Rada