PH foreign exchange reserves down in November

MANILA, Philippines – The country’s gross international reserves (GIR) went down in November following a high in October, the Bangko Sentral ng Pilipinas (BSP) reported Monday, December 7.

BSP Governor Amando Tetangco Jr said the country’s GIR reached $80.57 billion in end-November, $525 million lower compared to $81.09 billion in October. (READ: PH foreign exchange reserves rise anew in October)

GIR, the sum of all foreign exchange flowing into the country, can serve as buffer to ensure that the Philippines would not run out of foreign exchange that it could use to pay for imported goods and services, or settle obligations in case of external shocks.

BSP can also buy dollars from the foreign exchange market to prevent sharp depreciation of the peso or it can sell to avoid sharp appreciation of the local currency.

Lower gold prices

The foreign exchange level in October was the highest since December 2013, when the country’s foreign exchange reserves hit $83.18 billion and was close to hitting the full-year GIR target of $81.6 billion set by BSP.

Tetangco traced the decline in GIR last month to higher foreign debt payments by the national government, as well as the lower gold prices in the world market.

The value of the BSP’s gold holdings fell 6.7% to $6.7 billion in November from $7.18 billion in October. The central bank’s overseas investments likewise slipped to $71.08 billion from $71.36 billion.

Meanwhile, the BSP’s foreign exchange operations yielded $1.17 billion in end-November or 25.3% higher, compared to the end-October level of $931.6 million.

Tetangco said the end-November GIR level remains sufficient as it can cover 10.3 months’ worth of imports of goods and payments of services and income.

The GIR level was also equivalent to 6 times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity.

2015 target

The BSP expects the Philippines to end 2015 with about $81.6 billion in dollar reserves.

The central bank 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 in 2014.

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