Emerging Markets Rates and Currencies Handbook

that legitimate demands for foreign currency are satisfied. (https:/ /www.bsp.gov.ph/Media_and_Research/Primers %20Faqs/exchange.pdf). When it comes to implementing monetary policy, BSP uses various instruments to achieve the inflation target set by the National Government. The primary monetary policy instrument of the BSP is the overnight reverse repurchase (RRP) rate. The RRP rate is the rate at which the BSP borrows money from commercial banks within the country. The BSP raises or reduces its overnight RRP rate depending on the BSP’s assessment of the outlook for inflation and gross domestic product (GDP) growth, and in doing so, implements its monetary policy stance. If the BSP perceives the inflation forecast to exceed the target, then it can implement contractionary monetary policy by raising its policy interest rate. On the other hand, if the BSP sees the inflation forecast to be lower than the target or there is need to increase liquidity in the financial system, then it can implement expansionary monetary policy by reducing its policy interest rate. There are other actions that the BSP can do to contract or expand liquidity in the financial system such as increasing/decreasing the reserve requirement, encouraging/discouraging deposits in the overnight deposit facility (ODF) and term deposit facility (TDF) by banks, outright sales/purchases of the BSP’s holdings of government securities, among others. (https:/ /www.bsp.gov.ph/Media_and_Research/Primers %20Faqs/targeting.pdf Convertibility Convertible with restrictions onshore. The BSP’s Manual of Regulations on Foreign Exchange Transactions (FX Manual https:/ /www.bsp.gov.ph/Regulations/MORFXT/MORFXT .pdf) outlines the eligible underlying transactions for which foreign currency may be purchased against PHP, some of which may require submission of prescribed supporting documents. FX Spot FX Forwards NDFs FX Options Interest Rate Swap Interest Rate Options XCCY swaps Market Overview Onshore Market    ✗  ✗ ✗ Offshore Market ✗ ✗   ✗ ✗  Onshore Volume (MM USD Daily) Offshore Volume (MM USD Daily) Onshore Max Tenor (Or Typical Tenor For Spot) Offshore Max Tenor (Or Typical Tenor For Spot) Onshore Typical Deal Size (MM USD) Offshore Typical Deal Size (MM USD) Onshore CitiFX Pulse Capabilities 800-1000 N/A T+1 N/A 1-3 N/A  300-500 N/A 1 year N/A 5-10 N/A  N/A 300-500 N/A 1-2 year N/A 5-10 ✗ N/A 100-200 N/A 5 years N/A 10-20 ✗ 1-2 N/A N/A N/A N/A N/A ✗ N/A N/A N/A N/A N/A N/A ✗ TBA 10-20 5 years 5 years deals are episodic 5-10 ✗ Offshore CitiFX Pulse Capabilities ✗ ✗ ✗ ✗ ✗ ✗ ✗ Options are tradeable, however quote to be provided by Citi on case by case basis only. Source: Citi indicative information Market opening hours and liquidity during the day Market hours: 09.00 – 16.00 Fixing