Posted on 09 Jul 2012
The Philippine central bank said on Saturday it had tightened the rules on its short-term special deposit instrument that has attracted funds amounting to 1.7 trillion pesos (US$40bil), to help tackle speculation that could heighten volatility in the foreign exchange market.
Authorities have expressed concern that foreign funds may have been taking advantage of the higher rates being offered by the special deposit account (SDA) facility, introduced by the central bank in 1998 to help manage liquidity in the financial system.
Governor Amando Tetangco said the central bank's monetary board approved on Thursday new rules requiring banks and their trust departments to ensure that no funds invested in SDAs “have been sourced directly or indirectly from non-residents”.
