MANILA, Philippines – The country’s foreign exchange reserves hit their highest level in more than two years, said the Bangko Sentral ng Pilipinas (BSP) on Friday, May 6.
Gross international reserves (GIR) reached $83.47 billion in April, $489.5 million higher compared with the revised $82.98 billion level in March, said BSP deputy governor and officer-in-charge Vicente Aquino.
April’s result is also the highest level the reserves have been at since reaching $83.18 billion in December 2013. The GIR also broke through the full-year target of $82.7 billion set by the BSP.
The GIR is the sum of all foreign exchange flowing into the country. These reserves serve as cover to ensure that the country does not run out of foreign exchange used to pay for imported goods and services or foreign currency debt.
The BSP said that the current GIR level can cover 10.4 months’ worth of imports of goods and payments of services and income.
It is also equivalent to 5.5 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.
Gold and investments
Aquino said that the increase was driven by gains in the BSP’s gold holdings due to an increase in the global price of gold as well as added income from investments abroad.
BSP data showed the value of BSP’s gold holdings went up by 5% to $8.15 billion in April from $7.76 billion in March, while income from foreign investment rose to $71.57 billion from $71.38 billion.
These gains, however, were partially offset by payments made on maturing foreign exchange obligations, Aquino said.
The country’s foreign exchange reserves reached $80.67 billion last year, slightly lower than the revised GIR level target of $80.7 billion for 2015 but higher than 2014’s total of $79.54 billion.
For this year, the BSP sees the GIR hitting $82.7 billion, which is equivalent to 9 months’ worth of import cover.
It also expects cash remittances from overseas Filipino workers to grow by 4% this year amid a strong showing, so far.
The central bank also expects a current account surplus of $5.7 billion in 2016, which is lower than the projected level of $8.9 billion in 2015 due mainly to the expected large increase in the imports of goods. – Rappler.com