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Manila OK's FX deposit to finance LCs

Manila OK’s FX deposit to finance LCs

(Philippines) - The Philippines Central Bank (BSP) has approved banks being able to use a portion of their dollar deposits to finance letters of credit, import bills and other trade accounts. The Monetary Board of the BSP will allow banks to borrow up to 30 percent of their total foreign currency deposit units (FCDUs), or up to 30 percent of their foreign trade assets, whichever is the lower.

Banks have been previously unable to touch their FCDUs in funding regular banking operations, which are managed separately from other banking activity. FX deposits are currently worth some $12.6 billion, mostly placed in offshore based dollar instruments.

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