BSP wrapping up review on easing forex rules

The Bangko Sentral ng Pilipinas (BSP) on Wednesday said the Philippines is ready for freer movement of foreign exchange and is wrapping up its review to present proposed reforms that it would present within the month to the Monetary Board, its policy-making body. BSP governor Amando Tetangco Jr did not hint at the pace or scope of the changes being considered but said the central bank was only completing a process started 15 years ago. Tetangco said the BSP had already started liberalizing its foreign exchange rules in 1992 and the process continued for five years until it was ceased with the onset of the Asian financial crisis in 1997. "We had to make some adjustments in 1997 because the economy was suddenly not in a good position. But now, we are in a good position to pursue these reforms that over the long term we think will spur more growth," he said. The central bank governor noted that the BSP was carefully studying all aspects of the economy that would be affected by full liberalization, including movements in the country's current and capital and financial accounts in the balance of payments. "We are looking at all of these factors to be able to tell what we can do and when," Tetangco said. "But a lot of things have changed—there is now demand for a freer movement of foreign exchange," he added. Tetangco said the BSP was in consultation with the financial sector, broadening the scope of the policy review and the sweeping reforms that were expected to result from on-going discussions. He said the consultations will likely be finished by the end of February. The BSP said the on-going review of its overbought and oversold limits was part of a financial reform package and also an evaluation of the central bank's rules on forex companies and operations. But market players have interpreted the BSP moves to liberalize forex flows as an attempt to curb the appreciation of the peso. The BSP, in the wake of Thailand's short-lived decision to restrict the appreciation of the baht, had said it would not implement similar policies on the peso, saying that the exchange rate was best left to market forces. -GMANews.TV