The President said yesterday Bangko Sentral ng Pili-pinas (BSP) Governor Rafael Buenaventura concurred with her observations that the allowable ceiling appears too high, enabling unscrupulous traders to take advantage of currency slumps.
"As an economist, I think the ceiling should be lowered. I told him (Buenaventura) and he agreed," Mrs. Arroyo said.
She said a lower ceiling could help the government stop the hoarding of dollars.
"We can arrest violators if we have evidence of ceiling violations. But right now the ceiling is just too high," the President said.
The other day, the President said the government was preparing legislation that would impose stiffer penalties on dollar-hoarding banks, which have been partly blamed for the panic over the peso during its recent slump.
Last Wednesday, the peso recorded a six-month-low of 54.33 before recovering slightly the next two days. Still, the President was prompted to direct her finance secretary to join forces with monetary authorities in helping thwart the speculation and improve liquidity.
Hoarders have already been warned that they stand to lose by continuing to hold on to their dollars in the hope of a continued peso slump.
Meanwhile, Senate President Aquilino Pimentel Jr. urged the government to adopt the so-called "Mahathir formula" in curbing speculation, hoarding and flight of dollars.
At the height of the Asian financial crisis in 1997, Pimentel said, Malaysian Prime Minister Mohamad Mahathir imposed a regulation that people without businesses that needed dollars for their imports could not buy the American currency.
"If you are buying dollars within Malaysia, you will be asked about your line of business and whether you need dollars for your operation. If you have no business in Malaysia, you would be told to buy your dollars in other countries, but not in Malaysia," he said in his weekly radio program.
Pimentel said Mahathir’s drastic control measure, while criticized by certain economists, proved effective in stopping dollar speculation and stabilizing the Malaysian ringgit.
"If it’s effective in Malaysia, it may also be effective in our country," he said.
Unless bold but practical measures like this are taken, Pimentel said, the government will not be able to arrest the peso depreciation.
He said the government cannot always rely on stop-gap measures to defend the peso such as unloading a portion of the government’s dollar reserves. — Marichu Villanueva