Bangko Sentral losses balloon to P78.43BBy Michelle V. Remo
Philippine Daily Inquirer
Losses of the Bangko Sentral ng Pilipinas nearly trebled as of October last year as its heavy dollar purchases, which were meant to temper the appreciation of the peso, and huge interest payments bloated its expenditures.
Based on its latest income statement, the BSP incurred a P78.43-billion net loss in the first 10 months of 2012, which was nearly three times the P27.29 billion registered in the same period of the previous year.
Documents showed that P41.38 billion of the loss resulted from the central bank’s foreign exchange operations wherein it buys or sells currencies to ease the volatility of the exchange rate. In case of sharp appreciation pressures on the peso, the BSP buys dollars from time to time to temper the local currency’s rise against the greenback.
BSP Governor Amando Tetangco Jr. earlier said the central bank maintained the policy of allowing the value of the peso to be largely determined by the market, but with a flexibility to intervene in some instances to avoid a sharp and sudden rise or fall of the local currency. Extreme volatility of the peso has adverse consequences on businesses and the economy, Tetangco noted.
About P37.05 billion of the BSP loss came as revenues fell short of expenses, mainly interest payments that amounted to P76.84 billion during the 10-month period.
The BSP pays interest on deposits placed by banks such as the overnight and special deposit account (SDA) windows. The acceptance of deposits is a way to help siphon off excess liquidity from the economy to prevent runaway inflation.
Deposits in the SDA facility alone stood at about P1.7 trillion last year.
The sharp rise of the peso last year has elicited complaints from the export sector. Exporters said the significant appreciation of the peso made Philippine-made goods more expensive for foreign buyers and therefore less competitive.