RP tightens forex rules

RP tightens forex rules

MANILA (AFP): The Central Bank of the Philippines yesterday imposed tighter restrictions on banks' foreign exchange trading as part of a measure to counter speculation.

Under the new rules, banks would have to inform the central bank within two banking days of the cancellation or non-delivery of any forward contracts.

Violations will result in fines as well as temporary suspension of the offending bank's opening of new letters of credit.

In the forward market, currencies are traded for delivery in the future, usually up to 12 months.

The new rule is intended to force banks to recompute their daily net open position without including canceled or non- delivered forward contracts.