PH foreign exchange reserves rise anew in October

MANILA, Philippines – The country’s foreign exchange reserves rose for the second straight month in October, the Bangko Sentral ng Pilipinas (BSP) reported Friday, November 6.

BSP Governor Amando Tetangco Jr said the country’s gross international reserves (GIR) reached $81.14 billion in end-October or $59 million higher compared to $80.55 billion in end-September.

GIR is the sum of all foreign exchange flowing into the country, which serve as buffer to ensure the country does not run out of foreign exchange it could use to pay for imported goods and services, or maturing obligations in case of external shocks.

When needed, the BSP buys dollars from the foreign exchange market to prevent the peso’s sharp depreciation. It can also sell to avoid sharp appreciation of the local currency.
 
Slight uptick

BSP October’s GIR record was the highest since December 2013 when the country’s foreign exchange reserves hit $83.18 billion.

It is also near the full-year GIR target of $81.6 billion set by the central bank.

Tetangco traced the slight uptick in GIR last month to the national government’s net foreign currency deposits, revaluation adjustments on the central bank’s gold holdings, as well as its income from investments abroad.
 
The value of the BSP’s gold holdings grew 2.3% to $7.18 billion in October, from $7.01 billion in September.

Its overseas investments inched up by close to 1% to $71.44 billion from $70.79 billion.
 
Tetangco said the foreign exchange inflows were partially offset by payments made by the national government for its maturing foreign exchange obligations.
 
Ample reserves

The end-October GIR level remains ample as it can cover 10.4 months’ worth of imports of goods and payments of services and income.
 
The GIR level was also equivalent to 6.1 times the country’s short-term external debt based on original maturity and 4.4 times based on residual maturity.
 
The BSP expects the Philippines to end 2015 with about $81.6 billion in dollar reserves. It also sees the country’s balance-of-payments (BOP) position to post a surplus of about $2 billion, a reversal of the $2.9 billion deficit booked last year.

Tetangco earlier said the BSP is finalizing revisions of the BOP position data particularly on trade as well as portfolio investments. – Rappler.com