The Market Monitor Minding the Nation's Business
By Riza Lozada
The government further relaxed rules on foreign-exchange transactions, raising the amount of foreign that can be bought from local banks without the need for documentation, the policy-making Monetary Board (MB) said.
MB Chairman BSP Governor Amando Tetangco Jr. said local residents may purchase from the banking system without supporting documentation $500,000 from $120,000 for individuals and $1 million for corporate purchases.
“This policy aims to enhance and further facilitate access to FX of both individuals and corporates for legitimate non-trade current account transactions,” the BSP said.
The Monetary Board also allowed the deposit of residents of foreign currencies purchased from banks for certain underlying transactions such as for travel abroad and payment of certain obligations to non-residents tp be converted into foreign currency deposit unit (FCDU) accounts, prior to the outward remittance to the intended non-resident beneficiaries.
This shall provide residents with greater flexibility in managing their cash flows as well as provide greater ease in transacting in foreign currencies, Tetangco said.
The MB also lifted the prohibition on the sale of foreign currencies by banks and their forex units for local use.
This measure will facilitate payment by residents of obligations to their resident counter parties and allow further diversification of residents’ investments, Tetangco said.
The new forex rules also lifted the requirements for prior BSP approval and registration for private sector loans to be obtained from FCDUs or expanded FCDUs of banks to facilitate access of the private sector to bank financing.
The board also approved the increase in the amount of legal tender local currency that may be brought into and out of the country from P10,000 to P50,000 to provide greater convenience to travelers to and from the Philippines, and allow settlement of obligations in jurisdictions outside the Philippines where the Philippine peso is accepted as a currency of settlement.
Tetangco said the implementing circular for these policies will be issued to take effect on 15 September 2016.
“Notwithstanding the liberalized rules, banks are expected to continue to adopt safe and sound practices in their FX transactions and dealings with clients/other counter parties,” Tetangco added.
“The BSP said that it will remain vigilant and stand ready to act to keep the FX market stable,” he said.