By Karl Angelo N. Vidal, Reporter
THE PHILIPPINES is set to have a peso-renminbi (RMB) spot market, which is seen to help boost trade and business relations between the Philippines and China.
According to a statement, the Bangko Sentral ng Pilipinas (BSP) is set to sign a memorandum of understanding (MoU) with the Bank of China Manila, as well as its local banking partners, on Tuesday to ratify the formalization of the Philippine RMB Trading Community.
The Bank of China’s partners include Asia United Bank Corp., Bank of Commerce, BDO Unibank, Inc., Bank of the Philippine Islands, China Banking Corp., East West Banking Corp., Metropolitan Bank & Trust Co., Philippine Bank of Communications, Philippine National Bank, Philippine Business Bank, Rizal Commercial Banking Corp. (RCBC), Sterling Bank of Asia, Security Bank Corp. and UnionBank of the Philippines.
“The MoU signing between the BSP and Bank of China Manila, along with its local banking partners, will ratify the formalization of the Philippine RMB Trading Community that aims to promote a fair, transparent, and resilient domestic renminbi market,” the statement read.
Economists said the establishment of the peso-yuan exchange facility will benefit trade and tourism between China and the Philippines.
“Access will now improve because it will encourage more financial institutions to deal with the Chinese currency,” Ruben Carlo O. Asuncion, UnionBank chief economist told BusinessWorld in a text message.
Meanwhile, RCBC economist Michael L. Ricafort said the exchange facility would encourage more importers and exporters in the Philippines as well as Chinese tourists to switch their currency into peso at better exchange rates.
According to the Philippine Statistics Authority, China was the country’s top trading partner in August, with total trade amounting to $2.864 billion.
China was also the country’s second-largest tourism market with a total of 764,094 tourist arrivals in the January-July period, data from the Department of Trade and Industry showed.
The yuan-peso spot market will also reduce spreads or foreign exchange costs as businesses can now directly swap their peso into renminbi rather than passing through the US dollar.
“CNY/PHP spot market could also help any pressure or demand in the USD/PHP spot market as well,” Mr. Ricafort noted, adding that the new spot market “has already been long overdue.”
For years, local banks have been clamoring for the establishment of the peso-yuan exchange facility. In December 2015, former BSP Governor Amando M. Tetangco, Jr. said there were proposals to come up with a facility for a direct peso-yuan exchange, similar to the current peso-dollar spot market.
Increased use of the Chinese currency is expected after the International Monetary Fund (IMF) included the unit in its special drawing rights (SDR) or currency basket in 2015.
The SDR stands as the global measure for a country’s potential claim to the “freely usable” currencies held by the IMF as a multilateral lender. Aside from Chinese yuan, currencies part of SDR include the euro, US dollar, Japanese yen and British pound.

RELATED ARTICLESMORE FROM AUTHOR