Philippines, Japan renew currency swap deal

MANILA, Philippines — The Philippines and Japan have renewed their bilateral swap agreement (BSA) which enables both countries to exchange their currencies for the dollar.

The Bangko Sentral ng Pilipinas (BSP) and the Bank of Japan, which acts as agent for the Minister of Finance of Japan, signed the third amendment and restatement agreement of the third BSA last Jan. 1.

This is an offshoot of the third BSA authorized in October 2014. It was first launched as a one-way BSA in August 2001 and then developed into a two-way, second BSA in May 2006.

The BSP and the Embassy of Japan issued separate statements saying the BSA is a two-way arrangement where both countries can swap their local currencies in exchange for the dollar.

The deal also allows the Philippines to swap the Philippine peso against the Japanese yen.

The size of the BSA remains unchanged to up to $12 billion or its equivalent in Japanese yen for the Philippines and $500 million for Japan.

The renewed BSA incorporates amendments to align the BSA with the recent amendments to the Chiang Mai Initiative Multilateralization Agreement.

The BSP said the BSA aims to strengthen and complement other financial safety nets and further deepen financial cooperation between the two countries and contribute to regional and global financial stability.

It is also seen helping both economies by limiting foreign exchange risks in times of volatility and serving as a liquidity buffer for future economic crises.