Liberalizing Sale of Foreign Exchange

Article excerpt

In two previous articles, we wrote about the "problem of plenty" brought about by the surge of dollar inflows into the country. The Bangko Sentral has responded by "sterilizing" the dollars.

We explained that the "sterilization" operations were quite costly but necessary in order to relieve pressure on vulnerable sectors such as our OFWs, our exporters, and the BPO sector and other dollar earners.

Recently, the Bangko Sentral came up with additional rules liberalizing the purchase of foreign exchange both by residents and non-residents from authorized agent banks.

Somehow, these rules will facilitate the outflow of foreign exchange, thus alleviating current and expected capital inflows into the economy.

A side benefit will be a possible shift in foreign transactions from the informal market to the formal banking system.

Also, the new rules will benefit residents who have dollars obligations abroad or who intend to invest abroad.

"Residents can now buy a higher amount of foreign exchange to meet the costs of education and medical bills incurred offshore, for foreign travel and other services, without need for supporting documentation," BSP Deputy Governor Nestor Espenilla Jr. said.

Espenilla added, "Philippine residents will also have more foreign currency dominated investment instruments to choose from that can be funded from foreign exchange that can be bought from our banks."

On the other hand, non-residents will be afforded wider flexibility in funding their authorized peso accounts and later on reconverting these pesos into dollars.

Summarized below are the salient features of the new forex measures:

- Increase the amount of forex that may be sold over-the-counter by authorized agent banks to residents without documentation for non-trade current account transaction to US$120,000 (up from US$60,000). …