Philippines Announces Major Easing of Foreign Exchange Rulesby and
Cap on undocumented trades lifted to $1m for companies
Rule liberalization part of thrust towards greater openness
The Philippine central bank has approved a significant increase in the amount of foreign exchange that companies and individuals can buy without documentation in what analysts say is a bid to reduce the number of black market currency trades.
The Bangko Sentral ng Pilipinas said in a statement Friday that from September 15, the amount of foreign exchange that Philippine residents will be able to purchase for legitimate transactions will be increased from a daily limit of $120,000 to $500,000, while the limit for Philippine companies will be raised to $1 million.
Bank governor Amando Tetangco said the changes were "part of continuing efforts to keep regulations appropriate for the changing needs of the Philippine economy and following the thrust towards greater openness in view of the country’s increasing integration with global markets."
"This policy aims to enhance and further facilitate access to FX of both individuals and corporates for legitimate non-trade current account transactions," Tetangco said in the statement.
Jonathan Ravelas, chief market strategist at BDO Unibank Inc., the nation’s largest bank, said the foreign exchange rule changes took into account growing foreign investment in the Philippines stock market, as well as recent high profile money laundering cases.
"It allows people to buy more dollars from the banks, making transactions more evident," Ravelas said. "As they say, an ounce of prevention is worth a pound of cure."
The Philippines banking system was thrown into the international spotlight earlier this year after hackers stole $81 million from the Bangladesh central bank and routed the funds to accounts at the Rizal Commercial Banking Corp., then moved the money to a local remittance company that conducted currency deals in the black market. Investigators lost track of most of the money after it was gambled in Philippine casinos.
Bangko Sentral also approved the following at Friday’s meeting:
*Raise amount that travelers may carry into or out of the country to 50,000 pesos ($1,070) from the current 10,000 pesos ($215)
*Lift prohibition on the sale of foreign exchange by banks and their foreign exchange corporations for resident-to-resident transactions
*Allow private sector to borrow in dollars without BSP approval and registration