BSP eyes curbs on forex swaps to reduce risks
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GLOBAL TRADE PARTNERS HIT BACK: CANADA, EU IMPOSE HEAVY TARIFFS ON US GOODS AMID ESCALATING TRADE WAR
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HE Bangko Sentral ng Pilipinas (BSP) is looking to impose stricter exposure limits and higher capital charges on peso-denominated foreign exchange swaps to curb systemic risks. In a draft circular, the BSP proposed amendments to the regulations on non-deliverable foreign exchange forward (NDF), nondeliverable swap (NDS) and nondeliverable cross currency swap (NDCCS) contracts involving the Philippine Peso in the Manual of Regulations for Banks (MORB). Peso NDS is an FX swap where the Philippine peso’s value is compared against a foreign currency, and instead of exchanging
actual cash flows, the net difference between the contracted swap rate and the spot rate is settled in cash. Meanwhile, the Peso NDCCS is a currency swap where both exchange rate and interest rate differences between the peso and a foreign currency are settled in cash, removing the need for the actual transfer of currency cash flows. “The BSP is cognizant that NDFs, including its variants NDS and NDCCS may, directly or indirectly, create system-wide risks even if there is no delivery of principal amounts and even when NDFs, such Non-Deliverable FX derivatives are used as a
hedge,” it said. If the guidelines are approved, bank limits on peso-denominated NDF, NDS and NDCCS will be capped at 20 percent of qualifying capital for domestic banks and 100 percent for foreign bank branches. The limit is excluded from peso NDF transactions with the BSP. The BSP also proposed that the net open position for NDF, NDS and NDCCS be multiplied by 187.5 percent from 125 percent. All NDF, including NDS and NDCCS, contracts with residents must be settled in Philippine Pesos, the document read. Pretermination or cancellation of NDF, NDS or NDCCS
contracts before their maturity date will also be allowed, subject to mutual agreement between parties, disclosure of financial impact, such as mark-to-market value, and the responsible party assuming the cost of pretermination or cancellation. A bank with a purchase-and-sell position against a counterparty with the same fixing date may also be allowed to consolidate said positions for the purpose of bilateral net settlement. “To mitigate the buildup of systemic risks and protect against undue concentration in market usage, the following prudential guidelines are set in place,” the BSP said. Reine Juvierre S. Alberto
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PESO WATCH PITCHED Japan-PHL panel upbeat after Tokyo meetings
By Reine Juvierre S. Alberto @reine_alberto
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HILE the Philippine peso remains stable despite various uncertainties, worsening political conditions could trigger volatility in the currency, according to a former Bangko Sentral ng Pilipinas (BSP) official. On the sidelines of an economic briefing on Wednesday, BSP former deputy governor Diwa Guinigundo told reporters that if local politics is bad, the Peso will go down. However, Guinigundo said the negative political noise is counterweighted by the flow of investments in the country, such as bonds, making the Peso stable. The peso weakened against the dollar on Wednesday, closing at P57.36 per dollar. “Once the configuration of events changes, then you can expect some volatility,” warned Guinigundo, who is also a country analyst for New York-based think tank GlobalSource Partners. Should the Bangko Sentral ng Pilipinas (BSP) aggressively cut interest rates while the US Federal Reserve maintains a higher rate, Guinigundo said capital could flow out of the Philippines and further weaken the peso. There is currently a 100 to 125 basis point (bp) differential between the US federal funds target range of 4.50 to 4.75 percent and the BSP’s policy rate of 5.75 percent. “Over time, if this continues in a prolonged and sharp way, then you will have some problems with inflation,” Guinigundo said. “Even without this political noise, the BSP should always be careful in its easing policy stance. Precisely because in America, the US Fed is not that aggressive,” Guinigundo said. Still, the former BSP official said the central bank has space to reduce key policy rates by 25 bps in its upcoming rate-setting meeting in April. See “Caution,” A2
By Andrea E. San Juan
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PHILIPPINE BOOK FESTIVAL 2025 OPENS WITH VIBRANT FIESTA-INSPIRED SHOWCASE National Book Development Board (NBDB) Executive Director Charisse Aquino-
Tugade graces the opening of the Philippine Book Festival 2025, the country’s premier book festival, at Megatrade Hall in SM Megamall. Beyond the thousands of books for sale, festivalgoers explore new activation spaces like Pakyawan Plaza, featuring Pahiyas-inspired houses and vibrant MassKara costumes from Bacolod. The highly anticipated four-day event welcomes book lovers, authors, artists, and publishers from across the country. NONIE REYES
EXPORTERS HOPE PROTESTS OVER DUTERTE WON’T ADD TO RISKS
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HE umbrella organization of Philippine exporters is hoping “massive” protests would not ensue after the recent arrest of former President Rodrigo Duterte, saying political instability could make international buyers doubt exporters’ reliability to deliver. Philippine Exporters Confederation Inc. (Philexport) President Sergio R. Ortiz-Luis Jr. underscored that protests by Duterte supporters could compound the existing issues being faced by the Philippine exporters. “Aside from the usual issues of high fuel cost, red tape, corruption and erratic policies which put us at the bottom of the investors and tourist choice, now we will be considered as politically unstable if massive protests ensue,” OrtizLuis told BusinessMirror in a Viber message on Thursday.
“Of course with that image, exports will also be affected as buyers might doubt our exporters’ reliability to deliver,” added the Philexport chief. Data from the Philippine Statistics Authority (PSA) showed that the country’s outbound shipments amounted to $6.37 billion in January 2025. This is 6.3 percent higher than the $5.98 billion recorded in the same period in 2024. Other business leaders, however, noted recently that it is still “too early” to gauge the impact of the arrest of the former president on the country’s business climate and image. (See: https://businessmirror.com.ph/2025/03/12/ after-duterte-arrest-businessleaders-carry-on/) For one, Philippine Chamber of Commerce and Industry (PCCI)
Chairman George Barcelon said, “To be honest, what happened was unexpected. So because it’s unexpected, it’s still too early to tell. Well, life goes on.” “In our case, we’re on the business side. As you can see, we’re very active trying to attract missions from other countries para both ways they invest in us and we export our Filipino products,” Barcelon added. However, the business leader expressed hope that should there be an impact on the business climate, it would be minimal. “Business will continue. Life will go on. We just hope that there will be less disruption. And we hope that [even with] what has transpired, in the mind of the business sector, we’re still open about being optimistic,” added Barcelon. Andrea E. San Juan
FORMER President Rodrigo Roa Duterte PHOTO GRABBED FROM AP
HE Japan-Philippines Economic Cooperation Committee (JPECC) is projecting a 6.1-percent growth rate for the Philippines in 2025, a projection backed by more Japanese investments flowing as enhanced fiscal incentives under Create More kick in. “The 41st Joint Meeting formally commenced with reports from Japan-Philippines Economic Cooperation Committee [JPECC] Chairman Takehiko Kakiuchi and Mr. Osmond wherein they highlighted the 6.1-percent projected growth rate of the country in 2025 and the important participation of Japan and the Philippines in the upcoming 14th Asian Business Summit this July in Manila,” a statement of the Philippine Economic Zone Authority (Peza) on Thursday said. The 6.1-percent growth projection of the business group is on the low end of the government’s target of 6 to 8 percent. For his part, Peza Director General Tereso O. Panga said during the Peza’s mission to Japan with the Philippines-Japan Economic Cooperation Committee (Philjec) that Japan continues to play a “crucial” role in industrial growth, job creation, innovation, especially in the country through the ecozones. The partnership between the Philippines and Japan, added Panga, “has been built on decades of economic cooperation, cultural exchange, and mutual development.” Panga was joined by other Philippine officials including Special Assistant to the President for Investment and Economic Affairs (Sapiea) Secretary Frederick D. Go, Department of Trade and Industry (DTI) Secretary Cristina A. Roque and the Philjec members led by Chairman Richard Albert I. Osmond. In his keynote address, Go cited the government’s programs deemed “integral” in luring more investors into the country. These include the passage of the Create More Act, the provision of green lanes for strategic investments, the new public-private partnership code, and the Build, Better, More project of the Marcos Jr. administration. “The immense potential of our key sectors, combined with our shared aspirations, presents prospects for greater collaboration and sustained growth. The Philippines is open for business—ready to welcome partners in a thriving, investment-friendly environment. I encourage each one of you not to miss this golden opportunity,” Go said. Panga said Japanese investments in the Philippines are seen to increase with the enhanced fiscal incentives under the Create More Act, coupled with other “favorable” conditions that make the Philippines the See “Japan-PHL,” A2
PESO EXCHANGE RATES n US 57.3440 n JAPAN 0.3869 n UK 74.3408 n HK 7.3812 n CHINA 7.9223 n SINGAPORE 43.0284 n AUSTRALIA 36.2414 n EU 62.4419 n KOREA 0.0395 n SAUDI ARABIA 15.2918 Source: BSP (March 13, 2025)