Forex reserves end 2012 at all-time high of $84.25B

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The country’s foreign exchange reserves hit an all-time high of $84.25 billion at the close of 2012, buoyed by the central bank’s dollar purchases that were meant to temper what could have been a sharp appreciation of the peso. MARK WILSON/GETTY IMAGES/AFP

The country’s foreign exchange reserves hit an all-time high of $84.25 billion at the close of 2012, buoyed by the central bank’s dollar purchases that were meant to temper what could have been a sharp appreciation of the peso.

The yearend gross international reserves (GIR) were enough to cover a year of the country’s import requirements and were nearly six times the combined foreign currency-denominated debts of the government and private entities maturing within a year.

The latest amount of GIR was up by about 12 percent from $75.30 billion the previous year.

The BSP admitted that it had been buying dollars from the market to prevent a steep rise in the value of the peso against the greenback.

Officials said that under its policy, the BSP allowed the exchange rate to be generally determined by the market, but intervened through currency trading in cases of significant volatility pressures. They said the sharp and sudden rise or fall of the peso was disruptive to businesses and to the economy.

The peso closed at 41.05 against the dollar at the last trading day of 2012, gaining nearly 7 percent since the start of the year. The peso was the second-fastest appreciating Asian currency against the dollar last year after the Korean won, which rose 7.17 percent.

Exporters said the rise of the peso has made Philippine-made goods more expensive in dollar terms and less competitive. The appreciation of the local currency has also reduced the peso value of the dollar remittances sent by overseas Filipinos.

The BSP has sufficient dollars to buy from the market given the robust inflow of remittances, foreign investments in the local business process outsourcing (BPO) sector and external portfolio investments.

Officials said foreign portfolio investments were substantial in 2012 because the favorable performance of the Philippine economy fueled the appetite for peso-denominated securities.

The heavy dollar purchases by the BSP pushed its expenditures and led to a net loss of about P68 billion in the first three quarters of 2012, its latest income statement showed.

Nonetheless, the BSP said it would not hesitate to continue buying dollars if appreciation pressures on the peso remained significant this year.

The BSP said the accumulation of dollars has its benefits to the economy. The increase in the GIR reflected the improving capacity of the Philippines to pay its dollar-denominated debts. This, in turn, has led to improved credit ratings for the country.

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  • rodben

    I hope the next Administration will rule by the real Filipino leaders not by the Magicians and propagandist  otherwise same2 stories again.

  • rodben

    During Marcos time in 70’s 1$=6-8.00p the rice/kilo is 0.90cents and ligo sardines/can is 0.10cents,  during Cory time 1$=25-27.00p the price of rice/kilo is 16.00pesos and ligo sardines/can is 6.00p,  during Erap time 1$=50.00p the price of rice/kilo is 21.00p and ligo sardines/can is 9.00p, and this time mr. Noy2 1$=41-40.00p the rice/kilo is 35.00p and ligo sardines/can is 14.00p..who among the President is the BEST, PRO-POOR AND CHAMPION IN OFW’s WELFARE? I am 100million% agree to you Mr. London views I am also OFW too. Sabi nga mas maganda pa daw panahon ni Macoy at Erap kahit tinuring na magnanakaw sabi ng opposition napaka-mura naman ng mga bilihin.

  • http://pulse.yahoo.com/_DKHID3EEHTG27U5JXRIIUVKXQA Jose Rizal

    EPAL Palace constantly says: “It’s because of contant ‘Noynoying”, gun shooting, and the pertpetual uttering of his ‘Tuwad Na Daan’ campaign… OFW’s?… no way, they’re not the catalysts of high dollar reserves…
    Hahahahahahahaha!  Ang matatalinong Pinoy (daw), ay naloko lang ng isang abnoy.
    Hahahahahahahaha!

    • isbuk02

      musta na tito sotto na nagpapanggap na jose rizal? dadak ka ng dadak dyan eh wala ka namang nagagawang mabuti sa bayan mo! mag trabaho ka nga iho at ng may pakinabang ka naman hindi yung puro na lang pagnanakaw ang nasa isip mo!

      • http://pulse.yahoo.com/_DKHID3EEHTG27U5JXRIIUVKXQA Jose Rizal

        I’m here abroad, man…
        What are you talking about?
        Hahahahahahahaha!

  • valsore

    Heh-he. I like your adeptness in stabilizing our currentcy, but you cannot beat the invisible hand. :) The peso will continue to grow in value against the dollar.

    • Hayek_sa_Maynila

      If the invisible hand had been allowed to get its way, USD/PHP market will already be at 33 (vs. 40.850 today). Unfortunately, if BSP had allowed this to happen, the market may very welll return to 49 by 2014 as 33 is unsustainable.

      BSP must step in to avoid market failures which have potentially destabilizing effects on the financial system and the real economy.

  • Londonviews

    Please pass on to all your OFW friends and families!
    An Open Letter to President NoyNoy Aquino
    Dear PNoy,
    First off, let me, on behalf of the hundreds of thousands of OFWS around the globe who visited the country for Christmas, thank you for the warm welcome back to the country. This was evident in the various welcome banners scattered around the airport complex, and the Christmas tunes being played on arrival.
    There is no doubt that your administration acknowledges the OFWs contribution to the country’s current state of economics, characterised by a huge foreign currency reserves, and a renewed confidence among foreign and local investors.
    Undoubtedly, OFWs continue to play a significant role in ensuring a high level of foreign currency reserves in the country’s coffers. The global financial recession which brought about the devaluation of most currencies is having positive impact on the Philippine economy as hardworking OFWs now have to send more of their hard- earned cash as the peso continues to strengthen against the dollar. Samantalang bumababa ang halaga ng dolyar o euro o pounds, tumataas naman ang halaga ng piso subalit di naman bumababa ang pangangailangan ng milyong pamilya naming mga OFWS.
    Mr President, salaries in most countries have not risen for a couple of years now. In countries like the US and the UK, jobs are hard to come by. The Sterling Pounds has devalued from £1=PhP 105 in 2009 to £1=PhP 66 in 2012. This corresponds to a 43% devaluation, almost the same devaluation rate of the US dollars, Euro, and other major currencies. Pero, ang remittance naming mga OFWs ay di bumababa, bagkus ay lalo pang tumataas dahil sa patuloy ng pagtaas ng mga bilihin sa Pilipinas. That means OFWs’ hardships have not only doubled in the past couple of years, but quadrupled, or to be precise, at least by 40%!
    Something has to be done. I am not an economic genius nor a financial wizard. I am an OFW and a father of three. My earnings have devalued by 40% but the needs of my family continues to increase,year by year. One needs not be a mathematics genius to work out the imbalance! And I am certain that this is also the case for millions of Filipinos around the globe.
    I therefore plead for a more realistic peso valuation, or a system of buffering the effect of such valuation to help the millions of Filipino OFWs globally who, by sheer hardwork and family dedication, continue to drive the Philippine economy. We have for decades contributed without complaint, I think it but only fair that in these extraordinarily difficult times, the country for once give us something back. Not a token award, not a song, but a respite from these economic woes.
    It is simply not right that while the country dances and cheers with its economic achievements, the major drivers are rotting away in a foreign land….
    Your sincerely,
    Edison David
    Just another OFW from the UK

    • kilawin

       man your whiner…cant you see our economy is getting stronger! you just want to devalue the peso so you can have high purchasing power  just like the rest of OFW…..sorry nalang kayo kung lalakas pa ang peso , a strong peso means a strong purchasing power for ordinary filipinos…balang araw wala ng pilipino na mag ofw …sana tuloy2 nato….. parang ayaw nyo pang umunlad ang pilipinas!

      • ramelatilano

        That rediculous…you see…we are workers also…long long time ago we are suffering from devalued..peso while OFW and kin ay nagpapasasa sa pero…bili dito bili doon, shopping dito shopping doon…samantala kami…hirap na hirap sa sahop di pa rin maka ipon…pero tiis lang ng tiis…walang reklamo natutuwa lang pag may increase pero bawi naman sa gasolina at pagkain…ngaun mataas si piso reklamo kayo ano bay yan…tiis naman kayo…kawawa lang cguro yung sa saudi pero yung europe, us, canada, japan korea, singapore..kasaya saya pa rin…look their kamag anak di fb, di computer, lop top, galaxy …kami ito hirap pa rin pero walang reklamo..

      • junsepara

        you are wrong, and don’t blame ofw’s kin’s bili dito bili doon syndrome that you know nothing about, he,he,he, kin’s buying spree is a big help, if you are a worker you should know that, if they buy means more product to produce, means work, and ultimately philippines is locally productive, the more they buy the better the local economy, the more peso appreciating, it should be the gov’s responsibilty to lower the price of prime commodities that everyone should enjoy, the problem is, a long time ago and until now ofw carry the burden, the gov of the day should ensure prime commodities should go lower too, and donot think big chinese companies that is sucking us dry, be thankful ofw kin is always on a buying spree!!!

      • Hayek_sa_Maynila

        A country allowing its currency to strengthen bec. of portfolio capital flows is like a company raising employee wages after raising cash through borrowings. Raising the employees’ purchasing power is clearly unsustainable as they will make wages uncompetitive and may eventually lead to job losses. 

        In other words, lumakas nga ang purchasing power natin panandalian dahil sa artipisyal na paglakas ng piso, pero di naman tumatagal dahil mauubusan din ng kinikitang dolyar dahil pinapatay natin ang mga sektor na kumikita ng dolyar (e.g. OFW, BPO, exporter) at mga sektor na nakakatipid sa dolyar (local na industriya na lumalaban sa murang imports).

        Its clearly unsustainable.

        Yes, BSP has done a good job raising our GIR to $84.2Bn and cutting local interest rates by 100bps to temper PHP appreciation. Unfortunately, its not doing enough to keep Filipino wages competitive and is effectively leading to job losses.

        Let us not damage the geese that lay the golden eggs. If the goose dies, there will be no golden eggs. Let us not punish the OFs that have given us the credit rating upgrades.

        We will not achieve investment grade if we destroy the sectors that have assured the resiliency of the PHL’s external position.

      • Baket?

        There you go again Friedrich, worrying yourself to sleeplessness needlessly. You and that BPO president Mr. Hernandez are whining at the wrong tree. A stronger Peso makes our government look good. Who doesn’t want to look good? Stronger means better. Stronger Peso means more BPO employees get to buy more goods and enjoy a bigger bang for the buck, not to mention the multiplier effect. Even if the BPO industry failed to reach its goal of 500,000 employees for 2012, a stronger Peso is still better than a weaker Peso. Now, the BPO hiring has slowed down since 2011 and even more apparent in 2012 but that´s no cause for concern. Our local BPO employees are very resilient. Very very resilient. Let me emphasize one more time, very very very resilient. Should the stronger Peso continue to strengthen, our local BPO employees can always work as BPO employees abroad, in countries like India, Bangladesh and even China and Malaysia. Wherever they go, they bring the multiplier effect with them helping other countries help themselves. That´s the beauty of globalization and Filipino generosity. It took around 5 years for the previous administration to get the Philippine BPO industry off the ground. If the local BPO industry is no longer viable and cannot fly on its own, it is better that we be honest and be transparent to the BPO investors early on so that they can change their medium to long term plans ahead of time. Now that´s what we call honest and transparent governance. It is time that you dance to the music and toe the line.

      • Hayek_sa_Maynila

        That’s what’s funny about us…We should change that mindset. In Japan, Taiwan, China and others, people have parties when their currency weakens. Its the exact opposite here. That’s sad because it could mean Filipinos focus too much on consumption and what imported products we can purchase and is probably the reason why we are poor. Most other Asians think of what they will earn and what jobs they can find when their currency weakens…

        …no wonder we are being left behind by everybody else…konting success lang. 6.5% growth after a dismal 3.9% growth in 2011 e celebrate na agad with strong peso. taas agad ang living standards kahit minimal ang improvement sa income-per-capita. $2500. Naiwanan na tayong ng lahat.

        …now can you help us in this advocacy to make more Filipinos think more like the rest of Asia. 

        again, I don’t care if the stock market (PSEi) goes to 7,000 or domestic interest rates at 1.0% but please, please, please don’t allow the peso to strengthen. These are both popular developments that politicians can capitalize on but…

        We are shooting ourselves in the foot with PHP strengthening.

        Pnoy will get fewer votes from OF relatives, BPOs, exports, agri and mfg which compete with cheap imports if PHP continues to strengthen whereas most will be happy with strong stock market, and cheap credit

  • dukaponte

    Dapat ang dollar reserves natin ay ibayad na lang sa mga dollar denominated loans para mag stabilize ang peso natin para hindi maapektuhan ang export at OFW. Pag bumaba uli ang foreign reserves natin, mangutang uli.

    • Guest

      Agree!

  • dprotector

    I think the BSP should buy more dollars to lower the value of peso against US dollar and help the OFWs and exporters.

    • Don Dee

      I feel this pain. Because I earn a few dollars here and there (online jobs mostly), I’m finding it difficult to find jobs that are worth it. For now, tiis muna, take the loss on the chin. But if the peso valuates further, I don’t believe I can compete with other nationalities because I would be worth too much.

  • http://profile.yahoo.com/NDSDQN4BGPB733PT4JCTOE4BWY eric

    i wanted to believe that the philippines is on the track to economic growth…but why in Gods name are commodity prices continue to rise while wages remains static

    • phantomofhope

      commodity prices are determined by market supply and demand while wages are inflexible because minimum wage is set by policymakers.

  • Hayek_sa_Maynila

    Import cover is a useless multiple because 2012 imports were anemic. GIR/GDP ratio is better. Based on this ratio our GIR amounts to about 30% of GDP. The record high $84, while the biggest for the PHL historically is peanuts compared to the 160% GIR/GDP ratio of Singapore… a country that has allowed less than 6.0% SGD appreciation against USD in 2012 whereas PHP strengthened by 7.0% vs USD this year. Who is wrong? MAS or BSP? Last time I looked per capita income of Sing was $42,000, PHL was $2,500. Who is the better monetary authority: the one that allowed 7.0% appreciation or the one that kept it less than 6.0%?Hahaha!

    • FORTHE GOOD

      I see the positive effect of a strong peso more than the negative. As it is, peso is at the middle range compared with all asean currencies.

      Peso is still good!

      • Hayek_sa_Maynila

        Is #2 currency performance in Asia in 2012 considered middle? The last time I looked KRW was no.1, PHL was next. 

        PHP actually strengthened faster than SGD, TWD, and THB. IDR, INR both fell by more than 5.0% in 2012, I believe.

        How can the poorest among the ASEAN-5 in income per capita terms afford to give away so many jobs? Can the PHL really afford a 7.0% nominal appreciation of the currency? Remember, Indonesia whose economy has grown consistently above 6.0% in the last 4 years had a weaker currency vs. USD in 2012. 

        In contrast, the PHL which has had a very volatile growth performance (3.9% in 2011 and probably 6.5% in 2012). Is this enough to justify making USD wages in the PHL 7.0% more expensive?

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