$5,000 ACCOUNTS MONITOREDManila, May 2, 2003 -- The Bangko Sentral ng Pilipinas (BSP) is building up a database on dollar accounts of $5,000 as part of the efforts to clamp down on foreign exchange speculators.
BSP deputy governor Alberto V. Reyes said: "There were some buying dollars under different names and taking advantage of the $5,000 limit."
It is believed that some speculators are hoarding dollars and placing them in an FCDU (foreign currency denominated unit) account.
The BSP is constrained by the deposit secrecy law to check on the existence of such accounts. The database will help the regulators track the flow of foreign exchange bought by suspected speculators or black market traders.
Under the BSP regulations, over-the-counter purchases of less than $5,000 are not subject to documentary requirements.
The required documentation used to apply on purchases of $10,000 and above, which the central bank has tightened in 1998 to help the peso recover.
The heavy depreciation of the peso weeks before the Iraq war started prompted the central bank to intensify the drive against institutions and individuals that could be speculating at the spot market. Demand for dollars had been strong due to the scant supply.
The peso hit 55.60 sometime in March but the depreciation trend immediately reversed when the hostilities in Iraq started.
To help the appreciation of the peso, the Monetary Board, the policy-making body of the central bank, approved a four-pronged measure to curb speculation.
It lowered the overbought position of banks to 2.5 percent of their unimpaired capital of $5 million while it limited the maximum term of forward cover to six months. The BSP also virtually hiked interest rates by taking out the tiering mechanism on the policy rates while it increased by 1 percentage point the liquidity reserve requirement of the banks to mop up excess peso liquidity that could be being used of speculation. (By PEARL O. BANTILLO, Malaya)
Reported by: Sol Jose Vanzi
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