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1 PHP 0.02290 0.01709 0.01372 1.39615 0.02456 0.02495 0.24252 0.02697 2.34337
Inverse: 43.6700 58.5173 72.9114 0.71625 40.7113 40.0826 4.12331 37.0758 0.42674

1 USD 1.00000 0.74628 0.59895 60.9700 1.07267 1.08950 10.5910 1.17786 102.335
Inverse: 1.00000 1.33999 1.66960 0.01640 0.93225 0.91785 0.09442 0.84900 0.00977
Mid-market rates: 2014-08-16 06:31 UTC


Foreign Exchange Market
The Bangko Sentral ng Pilipinas (BSP) maintains a floating exchange rate system. Exchange rates are
determined on the basis of supply and demand in the foreign exchange market. The role of the BSP in
the foreign exchange market is principally to ensure orderly conditions in the market. The market-
determination of the exchange rate is consistent with the Governments commitment to market-oriented
reforms and outward-looking strategies of achieving competitiveness through price stability and
efficiency.
In the Philippines, peso-dollar trading among Bankers Association of the Philippines (BAP) member-
banks and between these banks and the BSP are done through the Philippine Dealing System (PDS).
Most of the BAP-member banks which participate in the peso-dollar trading use an electronic platform
called the Philippine Dealing and Exchange Corp. (PDEx). The BAP appointed PDEx as the official service
provider for the USD/PHP spot trading (which involve the purchase or sale of the US dollar for immediate
delivery, i.e., within one day for US dollars), and Reuters, as the exclusive distributor of all PDEx data.
Trading through the PDEx allows nearly instantaneous transmission of price information and trade
confirmations.
1
Meanwhile, banks which do not subscribe to PDEx can continue to deal peso-dollar spot
transactions via their Reuters Dealing screens.
Commercial banks in the Philippines are allowed to engage in spot, outright forward, and swap
transactions in Philippine pesos/US dollar and other third currency transactions.
2
Interbank trading is
conducted among member-banks of the BAP, and between these banks and the BSP. Member-banks of
the PDS can also deal through brokers. At present, there are four foreign exchange brokers in the
Philippines, Tulett Prebon Philippines, Inc., AFS Philippines Inc., Tradition Financial Services Philippines
Inc. and ICAP Philippines Inc. For third currency trading, most commercial banks use the Reuters
Dealing and the Bloomberg Financial Services.
The US dollar and Philippine peso legs of the PDS transactions are settled in a Payment-versus-Payment
(PvP) electronic system for the local interbank spot and forward foreign exchange market.
3
The PvP
links two real-time gross settlements systems the BSPs Philippine Payments and Settlements System
(PhilPaSS) for the peso transactions and the Philippine Domestic Dollar Transfer System (PDDTS) for
dollar transactionswith the Philippine Depository and Trust Corporation (PDTC) as designated clearing
entity for peso-dollar transactions of commercial banks under the BAP. The PDDTS is a local clearing and
electronic communications system operated by the BAP, the Philippine Clearing House Corporation
(PCHC), Philippine Securities and Settlements Corp. (PSSC) and Citibank, Manila. The PDDTS provides
the banking industry with a facility to move US dollar funds from one Philippine bank to another on the
same day without having to go through correspondent banks in the US. The system allows online, real-
time gross settlement of domestic interbank US dollar transfer and third party account-to-account US
dollar transfers. In addition, it provides a facility for online inquiry and settlement of foreign exchange
transactions, where the PDDTS participants enter interbank US dollar and Philippine peso transfer
instruction in a single screen.
The PDS has both on-line, real time and end-of-day batch netting transfer capabilities with final
settlement on the same day. This compares favorably with the most sophisticated domestic funds
transfer systems around the world in terms of speed/flexibility of delivery and settlement finality.
Trading at the PDS starts at 9:00 AM and ends at 4:00PM. A lunch break from 12:00 noon up to 2:00
PM is observed. The BSP reference dollar exchange rate (included in the foreign exchange rate bulletin)
for the day represents the weighted average of all done deals at the PDS during the preceding day.
Introduction

Philippine peso is another peso denominated currency that serves as the national
currency of the Republic of Philippines as the name suggests. Peso is the currency unit
that was founded in Spain for the first time and got spread and popular with the country
extending its reign by establishing new colonies all over the world during colonization
era. The currency unit is still in circulation as it forms the national currencies of a few
other countries, most important among them being Argentina and Mexico.
Philippine peso or also called "piso" in Filipino language is the official currency of the
country since 1852. The currency is denoted as P, , PHP or PhP in the daily usage
though the official symbol for it is a P with two horizontal lines striking through but it
faces a problem of lack of font support. The ISO 4217 code defines the currency code
of Philippine peso to be PHP and the numeric code as 608. The subunit of the currency
is known as "centavo" in English and "sentimo" in Filipino.
Overview

Philippines is counted among the newly industrializing nations of the world i.e. these
countries have not yet reached the status of developed countries economically but still
have developed more than the other developing countries. In other words, newly
industrializing countries are the best among developing nations and Philippines is also
provided with this title. Purchase power parity wise, Philippines is ranked 24th largest
economy in the world and is also listed in the "Next Eleven" by Goldman Sachs
investment bank. The agriculture sector and also the service sector dominated by BPO
industries contribute maximum to the GDP of the country.
The currency aptly supports the growth of this exceedingly promising nation and helps
it to move closer towards the first world countries level. In 2005, the currency was
even sanctioned as the best performing currency of Asia. But one problem Philippine
peso has been facing ever since is its devaluating value. If compared to gold, the peso
has just remained 0.002% of its 1903-1949 value. The imports and exports of local
currency are free up to a limit of 10000 pesos. Amounts equivalent or above 10000 US
dollar have to be declared in the case of import and export of foreign currency.
Structure

The currency of Philippines has its name registered in the Guinness Book of World Records for its 100000-peso banknote, it being
the largest legal tender note in context of size. Its width measures up to 8.5 inches and length measures 14 inches. Limited issue of
2000 peso has also been made to be circulated but it is rarely used. Other than these two notes, banknotes in 6 denominations are
in frequently used namely P20, P50, P100, P200, P500, and P1000. All these 6 banknotes have a uniform sizes and that is why a
different predominant color is used for each of them so as to distinguish them from each other. The 20-peso note has orange, the
50-peso note has red, 100-peso note has violet, 200 peso note has green, 500 note has yellow and the 1000 peso note has blue as
their major colors. Also, 5 and 10 peso notes are accepted as legal tender though they have been offered and minted as coinage
These notes possess the images of important personalities in the history of the nation on the front side and backside has the images
pertaining to the events and achievements of the nation. The table below lets you know the design of the notes in detail

20-peso note - Portrait of Manuel L. Quezon, first president of the Commonwealth of the Philippines, on the obverse
side of the note and Malacaan Palace with Pasig river on the reverse side
50-peso note - Portrait of Sergio Osmea, the second president of the Commonwealth of the Philippines on the obverse
side of the note and National Muesuem on the reverse side
100-peso note - Portrait of features Manuel Roxas, the first president of the Philippine Republic on the front side and
backside of the note depicts the Manila compound of the Central Bank of the Philippines
200-peso note - Front side possess the portrait of Diosdado Macapagal along with an image of Aguinaldo Shrine and
backside shows EDSA II with Gloria Macapagal-Arroyo, Macapagal's daughter, being sworn in as president
500-peso note - The obverse side shows a portrait of Benigno Aquino, Jr. and reverse side features a collage of various
images in relation to Aquino
1000-peso note - Portraits of of Jose Abad Santos, Chief Justice; Josefa Llanes Escoda, civic worker and one of the
founders of the Girl Scouts of the Philippines; and Vicente Lim, a general in the Philippine Army, first Filipino
graduate of West Point on the front side of the note and backside depicts Banaue Rice Terraces, Manunggul Jar cover
and Langgal.
The coinage in the currency gets equal importance as the paper currency and is minted in 6 facevalues that are 5,10, 25 centavos, 1
peso, 5 and 10 pesos. 1 centavo coins were also in circulation but it is no longer in use now. All the coins depict their face values
on the obverse side along with the year mark in which they were minted. 1, 5 and 10 peso coins also show the embossed images of
Jose Rizal, Emilio Aguinaldo and combined profiles of Andres Bonifacio and Apolinario Mabini respectively. The backsides of
the coins bear the official logo of Bangko Sentral ng Pilipinas, the central bank of the country. The bank is responsible for minting
of coinage and also printing and circulating of the paper currency. An attempt is made to differentiate the higher value coins on the
basis of different colors mentioned in the list below
5 centavo coin - Copper red
10 centavo coin - Copper red
25 centavo coin - Yellow
1 peso coin - Grayish white
5 peso coin - Pale yellow
10 peso coin - White yellow

History

Before Philippines was colonized by the Spaniards, barter trade was prevalent and the
exchange was done through that. With time, gold gained its due importance and gold
bits started to get considered as currency coins. In the 16th century, spain took over the
Philippine islands as its colony that led to the introduction of a numerous foreign
currencies of that time in that region; important among them were Mexican peso,
Alfonsino peso and Mexican cob coins. In the 18th century, a problem of shortage of
coinage arose and the Royalty of Spain had to permit for the minting of copper coins in
Philippines called "barillas". These were countrys first own coins and they were
launched in 1728. In 1852, the still in circulation currency, peso was introduced @ 1
peso = 8 reales, though at that time it was known as "pesos fuertes". The currency got
decimalized adopting "sentimo" as its subunit as well as "real" was completely
withdrawn from the market in 1864.
Philippines declared itself independent in 1898 and in the same year the Philippine
republic issued its own currency denominated in peso under the leadership of Emilio
Aguinaldo. Philippines saw itself into a war with America soon after it became
independent and it was once again colonized in 1901. In 1903, Philippine coinage act
was passed fixing the weight and size of the coinage. During the Second World War,
Japan occupied the island country. Currency notes such as "guerilla pesos" were issued
to be used for exchange during that time and held the clause that they were redeemable
after the war. Later on, the Japanese government banned the circulation of guerilla
notes too. The war got over in 1945 and the state got independent from America in
1946. The state of economy and fiscal problems were reviewed and it was concluded
that the peg to the US currency would have to be removed in favor of a properly
managed currency system and finally the Central Bank of Philippines (currently known
as Bangko Sentral ng Pilipinas) was established in 1949. The guerilla pesos were
redeemed in gold and silver coins and the 2 to 1 peg was maintained with the US
dollar.
The over printing of the bank notes led to drastic downfall of the currency on the very
1st day of its opening by a shocking 300%. In 1964, floating rate regime was adopted
for the currency and Philippines peso still follows it.
Factors affecting the exchange rates between two countries

The volatility in the foreign exchange rates depends upon a numerous macro economic factors that have different degrees of
importance to different economies of the world. Some special and exceptional factors affecting the rates may also exist in the case
of different countries. Following are shown the common factors on which the foreign exchange rate depends
Flow of imports and exports between the countries
Flow of capital between the countries
Relative inflation rates
Fluctuation limits on exchange rate imposed by the governments of the countries
Merchandise trade balance
Rate of inflation in the country
Flow of funds between the countries for the payment of stock and bond purchases
Relative growth
Short term and long term interest rate differentials
Cost of borrowings

Some key concepts
Although the value of the peso is commonly expressed in US dollar-relative terms, the BSP
routinely provides the exchange value in 32 different currencies, 18 of which are freely
exchangeable with the peso through the BSP and 14 which are not.
As of last week, the number of exchangeable currencies was temporarily increased by one, as
the BSP opened an exchange facility for Libyan Dinars in response to the conflict in that country
affecting several thousand OFWs.
The US dollar is the worlds most widely-used index currency and comprises the vast majority of
the Philippines foreign currency-based transactions, and so using it as a reference is largely a
matter of convenience.
The value of the peso is not, however, specifically tied to the value of the dollar. The peso is
instead described by the BSP as a free-float currency, one in which value is determined by
market supply and demand; a fixed currency, by contrast, is one which has a specific value in
terms of an index currency or a valuable commodity such as gold.
In actual practice, fixed currencies are not common although there are a few well-known
countries, such as Saudi Arabia, the United Arab Emirates, and Denmark, who follow the
practice. Likewise, true free-float currencies are relatively rare as well.
By definition, a free-float currency is not subject to central bank intervention, but that is almost
never the case; most central banks, including the BSP, do in fact regulate their currencies values
to some degree in what is informally referred to as a dirty float system, or what central banks
prefer to call a managed float system.
The law mandates the BSP to promote monetary stability and we view this in terms of both
prices and the exchange rate, explained BSP Deputy Governor Diwa Guinigundo. As a policy,
the BSP allows market-clearing determination of the exchange rate with occasional participation
to prevent too much volatility.

Factors affecting exchange rates
The reason the central bank has to occasionally intervene to stabilize the currencys value is that
there are a number of factors that are largely outside the BSPs control that can affect the pesos
value.
Differential inflation has perhaps the biggest impact. The inflation rates of two different countries
are rarely the same; the difference between the two rates thus tends to have a magnifying effect
on the exchange rate of their respective currencies.
If the Philippines has a higher inflation rate than the US as it does now, at 4.9 percent for July
versus 2.1 percent for the US that lowers the value of the peso relative to the dollar.
Other factors that affect exchange rates include differential interest rates higher rates tend to
attract foreign currency, except in cases where inflation rates are also high, and increase the
local currencys value; current account deficits, which lower the currencys value; public debt
levels, which lower currency value as debt levels increase; terms of trade, or the ratio of import
prices to export prices, which raises the currencys value if export prices increase faster than
import prices; and overall political and economic stability.

Policy tools
The BSP, while ostensibly adhering to a free-float regime, does have a number of policy tools at
its disposal to manage the pesos exchange value, and does employ them from time to time.
Direct intervention involves tapping the countrys gross international reserves (GIR), which are
ready assets controlled by the BSP that can be used to either buy or sell foreign currency,
usually through the PDEx.
It is usually difficult to determine with certainty when the BSP is using this particular policy tool.
Foreign exchange traders can generally identify who traders working on behalf of the central
bank are; for example, in its Market Watch note for August 7, when the peso plunged to P44.08
to $1, Unionbank made the observation that A good volume of $1.3Bn went through [the market]
today as the BSP was suspected of selling dollars to temper its surge.
The BSP, however, typically remains tight-lipped about its market activities, and for good reason
if traders knew for sure that the central bank was buying or selling foreign currencies, the
reaction of the market would likely exaggerate whatever the BSP was trying to accomplish and
defeat the purpose of the intervention.
The BSPs Guinigundo explained, During times of heavy FX (foreign exchange) demand, the
BSP opted to do some open mouth operation by assuring the market that liquidity shall be
provided by the BSP if and when it is warranted by market events.
This implies that even the suggestion that the BSP might intervene in trading is sometimes
enough to move the currency market, meaning that the central bank would obviously have to
exercise caution in actually taking trading action.
Besides the risk of distorting the currency market, the other major drawback to direct intervention
is that it has only a shor t-term effect. In order to maintain the peso exchange rate within a target
range, the BSP would have to continuously engage in foreign currency trading; this would in
effect turn the peso into a fixed-rate currency, which would make inflation harder to manage.
From a practical standpoint, the BSP simply does not have the financial resources to pursue that
policy, either; while its GIR is considered to be at a healthy level ($81 billion as of July), it would
be exhausted within a few weeks if it were applied solely to currency trading.
Instead, the BSP relies on subtler policy tools that have an indirect, but longer-lasting effect on
exchange rates. Adjusting the interest rates on overnight lending and borrowing facilities,
adjusting the interest rate on special deposits accounts (SDA), and adjusting the reserve ratio for
banks are all actions the BSP has taken recently, in each case, slightly raising the percentages.
Those moves are intended to curb inflation by encouraging banks to lend less and keep more of
their cash assets in reserve, either in their own vaults or on deposit with the BSP, all of which
removes money from the financial system; this in turn reduces the supply of pesos, helping to
increase the currencys value relative to the US dollar and other currencies.