PHILIPPINE monetary authorities are mulling over a further relaxation of foreign exchange regulations as they hiked their forecast for gross international reserves (GIR) this year amid the surge in hot money inflows.

Bangko Sentral ng Pilipinas (BSP) Gov. Amando Tetangco Jr. said they are looking at allowing unregistered companies and entities with foreign loans to buy foreign currencies from the banking system for a certain period of time to increase demand for the US dollar.

“Not all borrowers are registered like exporters who have access to foreign exchange market or other services. We will allow them to buy dollars from the banking system. This is something that we’ll study, but this is the direction that we’re looking at for further liberalizing the foreign exchange market. In other words this will hopefully fill the demand for dollar in the official market,” Tetangco told reporters.

He said existing regulations require companies or entities to register at any local bank before they can access the foreign exchange market.

If the policy-making Monetary Board approves the mechanism, then this would be the fifth time foreign exchange regulations are relaxed.

In October last year, the BSP increased the limit for over-the-counter foreign exchange purchases by residents from authorized agent banks and foreign exchange corporations without documentation for non-trade current account purposes.

This would encourage transactions through the banking system and away from the unsupervised foreign exchange market, according to the central bank.

At the same, the BSP increased the amount of foreign exchange that departing non-resident tourists or a balikbayan can reconvert at airports or other ports of exit.

The central bank also allowed residents to buy foreign exchange from authorized banks and foreign exchange corporations of up to $1 million from the previous limit of $100,000 to cover advance payment requirements for import transactions without BSP approval but subject to standard documentary requirements.

Monetary officials said this would ease trade transactions and shorten turn-around time for imports.

“It’s just further enhancement of the toolkit. Part of the response to the strong capital inflows,” Tetangco said.

The BSP chief said monetary authorities now expect the country’s GIR to reach $74 billion to $75 billion by yearend from the earlier forecast of $70 billion.

The GIR had surged by 45 percent to $71 billion at end-July.

The BSP attributed the build up in the reserves level to its foreign exchange operation and income from investments abroad, coupled with the revaluation gains in its gold holdings on account of the increase in prices in the international market.

An ample GIR level helps prop up the peso and keeps domestic inflation at bay.

Despite uncertainties in the world’s advanced economies, the BSP expects the reserve buildup to proceed as a consequence of a favorable balance of payments (BOP) position.

Data from the central bank showed that the BOP registered a surplus of $1.27 billion in July, up more than sevenfold from $154 million in the same month last year.

The BOP surplus inched up by 82.9 percent to reach $6.3 billion at end-July compared with $3.4 billion in the same seven-month period last year.

The country’s BOP position was projected to register a surplus of $6.7 billion this year and $4.5 billion in 2012 amid expectations of a higher trade deficit.

The BOP is a summary of the country’s economic transactions—current and capital and financial accounts—with the rest of the world.