BSP further eases forex restrictions

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has formalized new rules on foreign exchange transactions, particularly easing restrictions on the movement of foreign currency-denominated funds to and from the country.

“The new forex liberalization policy aims to facilitate cross border investment transactions consistent with our commitments under the ASEAN (Association of Souteast Asian Nations) Economic Blueprint 2015,” BSP Deputy Governor Diwa C. Guinigundo said in a text message.

“Under the revised rules, non-resident investments in PSE listed equity securities issued by non-residents may now be registered to allow outward remittance of capital and income on these investments using forex from the banking system,” Guinigundo said.

“In addition, the non-resident issuers of such instruments will also be able to outward remit the FX equivalent of the peso proceeds from the sale of their securities through the PSE,” he added.

“The listing and trading of non-resident securities in the domestic market can promote greater confidence in the economy and its capital market,” Guinigundo said.

Wilhelmina Mañalac, managing director at BSP’s international sub-sector, explained that this new measure will now allow non-residents to register with the central bank to exchange their peso-denominated income in banks and repatriate these funds.

“This is essentially allowing a non-resident issuer of papers in the Philippine Stock Exchange to buy foreign exchange in the foreign exchange market when he wishes to repatriate proceeds from his issue,”

Mañalac told reporters yesterday.

Since the income or dividends a non-resident will get from his issuance will be in pesos, they will need to exchange this in foreign currency and use them abroad, she noted.

Mañalac explained the BSP has no current rules or provisions for these kind of transactions as there have been no situations like this before. However, due to the upcoming market integration in the region, rules will have to be more flexible to make way for capital market growth.