In sharp contrast to Thailands recent move to curb capital inflows, the Philippines is set to liberalize existing restrictions on capital outflows as a way to hedge against the strong influx of foreign money while keeping its monetary policy steady for now. At its regular monthly meeting on January, 25 Monetary Board, the policymaking body of the central bank, maintained its overnight rates for the 15th straight month at 7.50 percent for overnight borrowing and 9.75 percent for overnight lending and kept the tiering system that was revived since November.

Since the central bank, Bangko Sentral ng Pilipinas (BSP), introduced the tiering system, some analysts said monetary policy had become too accommodating given possible price pressures from rising liquidity caused by heavy foreign exchange inflows from foreign portfolio investments and remittances from overseas Filipino workers.

Three possible measures expected by Credit Suisse to be adopted by the BSP as part of this liberalization were:Simplifying documentary requirements for buying foreign exchange for current account transactions (only transactions worth $5,000 and below are exempted from the tedious requirements). Raising banks overbought foreign exchange limit, currently at the lower of 2.5 percent of unimpaired capital or $5 million whichever is lower. Increasing the ceiling on resident purchases of foreign exchange for investment abroad, currently at only $6 million.