Central bank to use current tools to manage flows

Reuters

Posted at Oct 20 2010 12:05 PM | Updated as of Oct 20 2010 08:05 PM

MANILA, Philippines - The central bank's "enhanced toolkit" to deal with capital flows was existing policy instruments that would be used in conjunction with the main interest rate, Governor Amando Tetangco said.

Tetangco said the central bank was looking to further liberalise foreign exchange rules to ease capital outflows as the Philippines, along with other emerging economies, faces a surge of inflows that have led to currency appreciation.

"The policy rates remain the primary tool for achieving price stability, but with the evolving operating environment, we have had to employ a more pragmatic approach wherein we use, not just policy interest rates, but a policy mix," Tetangco said in an email response to Reuters sent late on Tuesday.

The central bank has allowed the peso to appreciate and has built up its foreign reserves and repaid some debt early to help better deal with the influx of funds, Tetangco said.