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MANILA – A ranking Bangko Sentral ng Pilipinas (BSP) official said the Philippines continues to have strong liquidity position but renewed its currency swap with Japan for possible needs in the future.
BSP Deputy Governor Diwa Guinigundo said the latest Bilateral Swap Agreement (BSA), is the fourth
between the two countries but stressed that “the Philippines does not need it at this point.”
“It is a confidence-building tool, a form of insurance against potential risks in the future,” he told PNA in a Viber message.
The third BSA took effect in October 2014 and expired last October 5.
Guinigundo said the latest deal comes with some enhancements such as “allowing drawdowns in yen in addition to US dollars and increase IMF (International Monetary Fund) delinked portion from 30 to 40 percent.”
Last Friday, the BSP said it signed with the Minister of Finance of Japan, through the Bank of Japan, the Restatement Agreement for the third BSA.
In a joint statement, the central banks said the deal “enables the Philippines to swap its local currency against Japanese yen, in addition to US dollars of up to USD 12 billion equivalent for the Philippines and USD 500 million for Japan.”
“The authorities of both countries believe that the strengthened bilateral financial cooperation will contribute to the stability of financial markets, promote the use of local currency including the Japanese Yen in Asia in the medium term, and thereby further develop growing economic and trade ties between the Philippines and Japan,” it added.
The BSA allows both central banks to tap the deal once they experience liquidity crunch.