Bangko Sentral Ng Pilipinas (“BSP”), the Philippines’ central bank and financial regulator, will temporarily relax foreign exchange (“forex”) trading policies. Specifically, the regulator will allow companies with unregistered loans to buy dollars, as long as they use them to service foreign loans.
This change in policy stems from the rising pressure on the Philippine peso. “For a certain period, we will allow companies and entities with foreign loans that are unregistered to buy dollars to service their loans,” said BSP Governor Amando M. Tetangco, Jr.,“This will increase the demand for dollars.”
Current BSP regulations dictate that foreign or foreign currency-denominated borrowings be approved by the central bank. Additionally, private firms must be registered with BSP if they have loans guaranteed by the public sector or covered by bank-authorized forex guarantees. This policy allows the central bank to keep an eye on the countries foreign debt obligations, and ensure that servicing costs are within reason.
This temporary easing will go into effect next year.