Bangko Sentral mulls relaxing forex rules

The Bangko Sentral ng Pilipinas on Friday said may ease the rules on the flow of foreign exchange in and out of the country as a countermeasure to the unfavorable impact of foreign portfolio investments on the economy.

 

“More funds may be going to the Philippines,” Bangko Sentral Governor Amando Tetangco Jr. said in an interview with reporters.

 

“Although there is no specific measure yet, we continue to evaluate if further liberalization of foreign exchange rules is needed to address the issue of capital inflows,” Tetangco told reporters today.

 

Central bank welcomes foreign portfolio investments, but too much of it may be bad for the economy, he said, citing its impact on inflation and foreign exchange.

 

Central bank data showed a net inflow of $1.9 billion in foreign portfolio investments to the Philippines in the year to July 20.

 

In the same period last year, net foreign inflows reached P2.7 billion.

 

Tetangco, however, said there is greater chance for foreign portfolio investments or hot money to surge in the months ahead as fund managers scour the globe for better opportunities, as the European debt crisis remains unresolved and the Philippine economy continues to thrive on positive macrofundamentals.

 

Last year, the Bangko Sentral waived certain requirements in taking foreign currencies out of the country. Last November, it allowed the repatriation of foreign currencies without prior regulatory approval.

 

Monetary authorities are evaluating the rules on foreign exchange rules to see which areas to further relax, said Tetangco. — VS, GMA News