MANILA, Philippines – Foreign exchange (FX) rules were relaxed anew on Thursday in a bid to ease business transactions and encourage outflow of dollars amid a strengthening peso.
The Bangko Sentral ng Pilipinas (BSP) unveiled new foreign exchange liberalization measures “to keep policies responsive to current economic conditions,” Deputy Governor Nestor Espenilla Jr. said.
“The new rules aim to further simplify FX transactions of the general public with banks,” Espenilla told reporters in a briefing.
Patria Angeles, director of BSP international operations department, said the measures may “ease pressure” on the peso, which was Asia’s second best performer versus the greenback last year. The peso closed three centavos stronger at 40.22 to a dollar Thursday.
Under the new regulations, foreign money allowed to be purchased by residents without the need for BSP approval was doubled to $120,000 from $60,000. Espenilla said this is to cover “rising costs” in studying abroad, medical bills, or travelling.
In the same manner, foreigners and balikbayans departing the country may now exchange their remaining pesos up to $10,000 or the equivalent amount in other currencies. The original cap to avoid BSP clearance was set at $5,000.
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Expatriates and foreign students living in the Philippines may now also open peso bank accounts using their earnings here.
“Previously, opening of bank accounts for non-residents may only be done by exchanging your foreign money to pesos and then using that pesos to open the account,” said BSP managing director Wilhelmina Mañalac.
More investment opportunities abroad were also opened up to Filipinos, although the cap of $60 million per investor per year was maintained, BSP said.
Beginning from the effectivity of a pertinent circular out Monday, Filipinos are allowed to invest in offshore foreign currency global and mutual funds, unit investment trust funds, equities issued by residents and listed abroad and securities of the same kind.
Residents are now also open to invest in real property abroad, including condominium units.
The central bank likewise extended by another two years, up to Dec. 28, 2016, the window where private sector borrowers may avail, without prior BSP approval, of unguaranteed foreign loans to finance public-private partnership projects.
On the flipside, the BSP has required the registration of foreign direct investments one year from their entrance to the country. This was a tightened rule from the original five-year leeway to “improve capture of more current data.”
The new measures correspond to the sixth wave of foreign exchange liberalization unveiled by BSP since 1993. Earlier easing rules were announced on Feb. 20 and 27, 2007, Jan. 16, 2009, Oct. 28, 2010 and Nov. 18, 2011.
Since 2008, Angeles said the BSP noted outflows have risen as a result of more liberal environment. From $800 million five years ago, outflows already amounted to $1.4 billion as of Oct. 2012.
More outflows ease the pressure on the peso due to large inflows.