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Historial Exchange Rate Regime of Asian Countries
 
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  Untitled Document
Philippines
  Philippine Peso is the currency of the Philippines. The Central Bank of the Philippines, the Bangko Sentral ny Pilipinas (BSP) administers foreign exchange controls and all other currency problems in the Philippines.

The former Marcos government of Philippines, known for its corruption, always aimed at retaining the foreign exchange earnings from traditional exporters. From 1970 to 1984, the Philippines had an intermittent history of multiple rate structure with different rates to foreign exchange transactions for exports, imports and foreign debts, on the basis of a daily "Guided Rate". From 1970 till 1973, traditional exporters were required to surrender 80% of the foreign exchange earning at a "Official Rate" fixed at 3.9, which is more disadvantageous to exporters than other rates. This requirement was later replaced by a stabilization tax on traditional exports, which also worked to siphon off the gains of traditional exports. (Bautista, 1987)

In mid 1980s, with the economic takeoff of the neighbouring Asia-Pacific area, the Philippines witnessed the importance of removing distortions in its economic regimes and opening up the highly protected economy. Also partly due to the 1983 financial crisis, in 1984 the multiple rate structure was abolished. Ever since then, the Philippines has maintained a floating exchange rate regime. An Inter-bank Rate, determined on the basis of supply and demand in the exchange market, has governed all transactions. The authorities intervene in the medium to maintain orderly market conditions and the political objectives. In addition, the Bankers Association maintains a Reference Rate as the Peso-U.S. Dollar convention rate for customs valuation purposes and for computation of import duties/taxies.

Major sources of reference include:

1. World Currency Yearbook. (WCY)
2. Annual Report on Exchange Arrangement and Exchange Restriction. (IMF)
3. Romeo M. Bautista (1987): Production Incentives in Philippine Agriculture: Effects of Trade and Exchange Policies.
   
 
Date
Changes to the exchange rate regime
Peso per U.S. Dollar
8 November 1965The fluctuating free rate was abolished. (WCY, 1984, p.614) 3.900 
21 February 1970A multiple rate structure with a Mixed Rate (not explained in WCY) was reinstated based on a controlled, floating Official Free Flucturating "Guided" Rate. (WCY, 1984, p.614) . The daily "Guided Rate" was establishedby the Bankers' Association. (IMF 1976, p.369). 80% of foreign exchange earnings from some traditional exports (including copra, sugar, logs, and copper concentrates) were to be surrendered to the Central Bank at the Official Rate of P3.90 per U.S. Dollar, while the remaining 20% could be sold at the free market rate. (Bautista, 1987, p.24) 5.500 
May 1970The requirement of surrender 80% of export earnings was replaced by a stabilization tax on traditional exports. (Bautista, 1987, p. 24)  
22 September 1970 6.435 
20 December 1970The gold content of the Peso was cut 7.89%, paralleling the U.S. Dollar devaluation.  
26 April 1972 6.780 
13 February 1973The gold content of the Peso was cut 10%, in the aftermath of the U.S. Dollar devaluation. (WCY 1984, p.614)  
31 December 1974 7.070 
1975In spot transactions between commercial banks and customers, the maximum and minimum spot buying rates are 0.5% and 1% below the guiding rate, respectively. The minimum and maximum spot selling rates are 0.75% and 1.25 % above the guiding rate, respectively. (IMF 1976, p.369)  
31 December 1975 7.510 
31 December 1976 7.440 
1977For spot transactions in excess of US$100,000 between banks and their customers, the margins are competitively determined. (IMF 1978, p.331)  
31 December 1977 7.380 
31 December 1978 7.380 
31 December 1979 7.420 
31 December 1980 7.600 
31 December 1981 8.200 
31 December 1982 9.170 
23 June 1983 11.000 
5 October 1983Inter-bank trading in foreign exchange was suspended. The "Guided" Rate was phased out in favor of a controlled, floating Effective Rate. (WCY 1984, p.614) 14.000 
31 December 1983 14.000 
1984All spot buying and selling margins were to be determined on a competitive basis. (IMF 1985, p.400)  
6 June 1984The exchange rate system was revised into a de facto multiple rate structure as follows: The Effective Rate applied only to essential imports and interest on the foreign debt.

Based on a 10% tax on the purchase of foreign exchange, an exchange for other transactions.

An exchange rate for export proceeds. The Black Market Rate was officially recognized as the major source of foreign exchange. (The exchange rate for purchase of exchange in other transactions: 19.80; Export proceeds were exchanged at P16.20 per U.S. dollar; The Black Market Rate: P20.00-P24.00) (WCY 1985, p.669) 

18.000 
10 October 1984The multiple rate structure was abolished.

Inter-bank trading in foreign exchange was resumed. An Interbank Rate, determined on the basis of supply and demand in the exchange market, was to govern all transactions. Authorities intervene when necessary to maintain orderly conditions. (WCY 1990-1993, p.510)  

 
13 December 1984The Peso-U.S. Dollar guiding rate was abolished. (IMF. 1986. p.422)   
31 December 1984 19.760 
29 March 1985The Central Bank announced that, the reference rate of the Bankers Association should be the Peso-U.S. Dollar conversion rate for customs valuation purposes and for computation of import duties/taxies. (IMF. 1986. p.422)  
31 December 1985 19.030 
31 December 1986 20.530 
31 December 1987 20.800 
31 December 1988 21.340 
31 December 1989 22.440 
13 September 1990Guidelines were issued that the buying rate for spot transactions must not be less than 1% below the reference rate of the Bankers' Association, while the spot selling rate must not be more than 2% above the reference rate.

For transactions other than spot, the buying rate must not be less than 1% below the spot buying rate, while the selling rate must not be more than 1% above the spot selling rate. (IMF. 1991, p.398) 

 
31 October 1990 28.000 
31 December 1990 28.000 
28 January 1991The margins for spot buying and selling rates for commercial reference transactions around the official reference rate were eliminated. (IMF. 1991, p.400)  
31 December 1991 26.650 
30 July 1992A system of eight-hour continuous interbank foreign exchange trading under the Philippine Dealing System (PDS) was introduced. (IMF. 1993, p.405)  
31 December 1994 24.418 
31 December 1995 26.214 
15 March 1998The authorities allowed the Peso to float more freely against the dollar by lifting the volatility bank system. The band include a 6% limit around the exchange rate of the previous day, with trading being suspended for the remainder of the day if the limit was reached. (IMF 1999, p. 683)  

Notes:

Throughout the course, the Philippine authority posted an Official Rate of P3.90 per U.S. Dollar. This rate was originally used for exporters to surrender their exchange earnings to the Central Bank since 1965. However, this rate is now left inoperative since the exporters are not required to render their export earnings any more. (WCY 1986-1987, p.511)

© 2000 The Chinese University of Hong Kong