Philippines Considers Peso-Yuan Exchange Facility, Tetangco Saysby
Banks proposed facility after yuan inclusion in IMF reserves
Central bank considering increasing yuan assets holdings
The Philippines will consider a proposal from banks to establish a direct peso-yuan exchange facility in anticipation of increased use of the Chinese currency following its inclusion in the International Monetary Fund’s reserve currency basket.
“There are proposals to come up with a facility for having a direct peso-yuan exchange similar to peso-U.S. dollar,” Bangko Sentral ng Pilipinas Governor Amando Tetangco said in a late Monday interview in Manila, without elaborating on the timeframe.
The IMF last week decided to include the yuan in its Special Drawing Rights basket starting October next year, a step deemed a milestone in the currency’s internationalization. China was the Philippines’ second-largest trading partner in 2014 with total trade worth $18.3 billion.
Philippine lenders will need to provide the central bank with details of the proposal, Tetangco said. Bangko Sentral is considering increasing its holdings of Chinese yuan assets as part of diversification of its reserves, he said.
At present, commercial banks in the Philippines are allowed to engage in spot, outright forward and swap transactions in pesos-U.S. dollar and other third
currencies including yen and euros.