Emerging Markets Rates and Currencies Handbook

36 Citi | Emerging Markets Currencies Handbook 2021 system, then it can implement expansionary monetary policy by reducing its policy interest rate. There are other actions that the BSP can do to contract or expand liquidity in the financial system such as increasing/decreasing the reserve requirement, encouraging/discouraging deposits in the overnight deposit facility (ODF) and term deposit facility (TDF) by banks, outright sales/purchases of the BSP’s holdings of government securities, among others. Convertibility Convertible with restrictions onshore. The BSP’s Manual of Regulations on Foreign Exchange Transaction (BSP FX Manual) outlines the eligible underlying transactions for which foreign currency may be purchased against PHP, some of which may require submission of prescribed supporting documents. Market opening hours and liquidity during the day Market hours: 09.00 to 16.00 (Interbank market closed from 12.00 to 14.00 — slightly poorer liquidity). 14.00 12.00 16.00 09.00 Good Liquidity No Liquidity Moderate Liquidity Fixing (incl. ticker) The PHP fix is a weighted average spot rate of the morning’s trades in the onshore spot market done from 9.00am to 11.30am Manila time, one day before value date as reported by the Bankers Association of the Philippines and published on Bloomberg as PHFRRATE Index. To trade off the fix value, orders must be passed before 9.00am (Manila time) on the prior day. For example to trade off the fix value 5 April, orders must be passed before 9.00am (Manila time) on 4 April. Regulation Offshore restrictions Resident corporates in the Philippines can access the offshore market. Non-resident restrictions Non-residents are permitted to transact FX with an onshore entity with supporting documents. Non-residents can open a PHP account but with restrictions. Non-resident PHP accounts shall be funded only by: a. peso proceeds from conversion of inward remittance of convertible foreign exchange; b. peso receipts of non-residents from, or peso sales proceeds of: (i) BSP-registered inward investments; and (ii) properties in the Philippines allowed to be owned by non-residents under existing laws; c. onshore peso receipts of non-residents from residents for: (i) services rendered by non-residents to residents; and (ii) trade transactions, under Part Two, Chapters I and II of the FX Manual, respectively; d. PHP receipts of expatriates working in the Philippines for less than 1 year representing salary/allowance/other benefits; e. peso funds of: (i) foreign students enrolled for at least 1 school term in the Philippines; and (ii) non-resident Filipinos; f. cash collateral used for investments under Securities Borrowing and Lending or similar arrangements; *Options are tradeable, however quote to be provided by Citi on case by case basis only. Source: Citi indicative information FX Spot FX Forwards NDFs FX Options Interest Rate Swap Interest Rate Options XCCY swaps Market Overview Onshore * Offshore Onshore volume (MM USD daily) 600 — 800 200 — 400 N/A N/A 2 N/A negligible Offshore volume (MM USD daily) N/A N/A 300 — 500 100 — 200 N/A N/A 10 — 15 Onshore max tenor (or typical tenor for spot) T + 1 3 years N/A N/A 5 years N/A 5 years Offshore max tenor (or typical tenor for spot) N/A N/A 1 — 2 year 5 years N/A N/A 5 years Onshore typical deal size (MM USD) 1 — 3 5 — 10 N/A N/A 1 — 2 N/A deals are episodic Offshore typical deal size (MM USD) N/A N/A 5 — 10 10 — 20 N/A N/A 5 — 10 CitiFX Pulse Capabilities Philippines