Law Summary
Revaluation Method for US Dollar Foreign Exchange Assets and Liabilities
- Primary revaluation rate: Philippine Dealing System Weighted Average Rate (PDSWAR) for the day
- Conditional switch to Philippine Dealing System Closing Rate (PDSCR) if discrepancy exists between PDSWAR and PDSCR exceeding 2% of PDSWAR
- Requires that total daily transactions be at least $20 million
- Last transaction volume should be at least 15% of total daily transactions
- If no transaction occurs on a given day, the immediately preceding revaluation rate is used
Revaluation Method for Non-US Dollar Foreign Currency Assets and Liabilities
- Calculated using the designated Peso/US dollar revaluation rate (as determined for US dollar assets/liabilities)
- Converted against the relevant US dollar/third currency exchange rate as per the Central Bank Reference Exchange Rate Bulletin
Accounting Treatment of Revaluation Entries
- Revaluation entries must be recorded at least monthly
- End-of-month revaluation entries may be reversed the following day to reflect accurate financial position
Effective Date and Implementation
- This revision is effective immediately from April 1, 1993
- Supersedes prior guidelines set forth in Circular Letters dated February 20, 1986, and April 23, 1986
- Incorporated as part of the Manual of Accounts for Commercial Banks
Key Legal Concepts and Compliance Requirements
- Emphasizes accuracy in foreign exchange valuation to ensure truthful financial reporting
- Introduces objective quantitative criteria for selecting appropriate exchange rates for revaluation
- Provides clear directive on fallback procedures when market transactions are absent
- Enhances transparency and consistency in foreign currency accounting practices within commercial banks