Asean renews forex liquidity support program

MANILA, Philippines – The Association of Southeast Asian Nations (Asean) has renewed for the fifth time the short-term foreign exchange liquidity support for member countries experiencing balance of payments difficulties.

The Bangko Sentral ng Pilipinas (BSP) and other Asean member central banks signed the fifth supplemental memorandum of understanding on the Asean Swap Arrangement  last Oct. 8.

 BSP Governor Amando Tetangco Jr. signed the MOU extending the ASA for two years starting Nov. 7.

 The ASA involves the provision of $2 billion short-term foreign exchange liquidity support for Asean member countries that experience balance of payments difficulties.    

The Philippines’ contribution commitment of $300 million allows the country to draw up to  $600 million as the need arises. 

 The ASA provides the country an additional safety net similar to other regional financial arrangements including the Chiang Mai Initiative Multilateralization  under the Asean+3.

Central banks and monetary authorities of the original Asean – 5 including the Philippines, Indonesia, Malaysia, Singapore, and Thailand agreed to establish reciprocal currency or swap arrangements in August 1977.

Originally intended to be in effect for just one year, the arrangement has been extended incrementally.

The Chiang Mai Initiative expanded the ASA to all current Asean members during the Asean+3 Finance Ministers’ meeting held in May 2000.

The total amount available for swap transactions under ASA was increased to $1 billion from $200 million in November 2000 and was doubled to $2 billion during the 8th Asean +3 Finance Ministers’ Meeting in May 2005.

Current Asean members include Brunei Darussalam, Cambodia, Indonesia, the Lao People’s Democratic Republic, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.