PH forex reserves hit new high in January

BSP effort to stabilize peso led to 11% GIR rise to $85.76B

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The country’s foreign exchange reserves hit another record high, partly fueled by the Bangko Sentral ng Pilipinas’ efforts to temper the peso’s appreciation by buying dollars. MARK WILSON/GETTY IMAGES/AFP

The country’s foreign exchange reserves hit another record high, partly fueled by the Bangko Sentral ng Pilipinas’ efforts to temper the peso’s appreciation by buying dollars.

The gross international reserves (GIR)—which determine a country’s ability to purchase imports, settle debts to foreigners, and engage in other transactions with the rest of the world—reached $85.76 billion as of the end of January, up by 11 percent from the $77.36 billion of the same period last year.

The BSP considered the latest GIR amount to be quite comfortable—enough to cover 12.3 months’ worth of import requirements.

Also, it was 5.8 times the amount of the outstanding debt denominated in foreign currencies of private and government entities maturing within the short term, the central bank said.

As a result, the international financial community’s confidence in the Philippines improved further because of the country’s clear ability to service its liabilities, BSP officials claimed.

“Inflows from the BSP’s foreign exchange operations and income from investments abroad, as well as foreign currency deposits by the national government, contributed to the appreciable increase in the end-January 2013 GIR level,” the BSP on Thursday said in a statement.

The central bank, through its foreign exchange operations, buys and sells currencies to stabilize the exchange rate, causing the country’s foreign exchange reserves to grow.

The BSP maintains a policy of letting the market determine the peso exchange rate. But it stressed that it would immediately intervene if the peso were to fluctuate sharply.

The sudden rise or fall of the local currency will adversely affect the economy, it explained. For instance, the appreciation of the peso will make Philippine-made goods more expensive, effectively reducing the competitiveness of the export sector.

In January, the peso averaged at 40.73 against the US dollar, stronger than the 41:$1 rate reported the previous month. Market players said that, had it not been for the BSP’s effort to stabilize the exchange rate, the peso would have risen more sharply.

Also, proceeds from the BSP’s investments provided a boost to the GIR. The central bank invests mainly in US Treasuries. The government’s foreign borrowings deposited in the BSP also beefed up the GIR for January.

The central bank’s gold holdings accounted for $10.3 billion of the country’s total reserves.

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  • ApoLapullapu

    Our dollar reserves is growing phenomenally because our businessmen are not using them to buy manufacturing equipment from abroad that could have created employment for our people.  We are like misers hoarding dollars instead of investing them to improve our country and people.

  • http://pulse.yahoo.com/_AIPSCQM2TZQUMQ5GEIMWMWDFL4 Edward Solilap

    The Central Bank bought most of the USDollar in the Market and declared they lose huge amount in the foreign exchange rate.

  • regd

    It is imperative that we sustain this growth. Having said that, our reserves is not a good indication of our financial health. This GIR can go up in in smoke at anytime if some manipulative currency speculator (Soros & co. are you listening) conspiring with other aggressively smart profiteers start doing what they do best.

    Watch for market hedging people. Already some are profiting from short and medium fluctuations. We are in good hands so far.

  • http://pulse.yahoo.com/_AYITA5V33GYZSLC3G37UCVNTKA Ben

    Now will the government get the cue? The central bank is making a lot of losses to buy dollars just to keep the peso stable and help protect OFW`s, BPO and exports. How much longer can the CB go on intervening to keep the peso stable and is not fluctuating steeply into appreciation and erode our gain?

    The governmnet must find ways to spend the extra savings from the the central bank for the healthy dollar reserve should only be able to handle 3-6 months of imports, and now 1 year worth of import fueled by investor`s hot money speculation. Tell me, why are we hoarding dollars passed 6 months worth of import if we will not really going to use it anyway to import? The result of that is upward pressure on the peso and that something has to give in, no one is getting alarmed since after all, all seemed to be enjoying. But, look at the central bank losses already in billions…where are they going to get the funding to buy dollars again? Yup through off shore CB investments, bonds, debt, borrowing…this dollar reserve does not really reflect the true wealth acquisition for to gain that reserve the CB has to borrow and print more peso or sell the peso at a lower rate, I think. The government again has to start working against time to break the vicious cycle and start funding the PPP now, for now the financial infrastructure seems to be holding but behind all this luster is the central bank`s bleeding just to hoard this dollars, although no central bank goes bankrupt if they incur large losses I think, they don`t make profit from trading peso to the dollar either..this money inflow has two edged sword.

    Time for the government to spread the wealth through PPP projects and job creation and building more middle class citizenry…and fast for the honey moon for this government is over. but the PPP is yet to take off satisfactorily to spread out growth and make the economy more resilient through job creation for such priorities like, the road dike system creation to help stop the yearly economic and lives losses from super typhoons and just a regular flashfloods, sewerage system to protect our rivers and lakes for our water supply future and create more tourism out of clean bodies of water, the building of high speed rail system for freight and commuters alike to speed up growth potential of all provinces this trains will have station stops, internationally accepted provincial airports with night capability, power generation to help keep industries growing and keep the electric rates competitive, fuel substitute such as ethanol from sugar canes to support the industry and their workers, CNG from Malampaya for buses to decrease import of the highly volatile oil that can reduce our growth in cases of another overseas conflict or the competition for growth of the industrialized worlds, and then the need for our AFP modernization to protect our resources and peace for more growth potential, and the most important of all the growth of our PPP research and development for the consumers for they will help design and innovate products and services, preordering and funding products that haven`t been created, and even in investing in early-stage businesses or pioneering ventures such as the government pratnership with certain airplane makers such as Boeing or Mitsubishi in creation of generic engines, for airplanes, ships or power plant turbines for export and in turn for our own home grown tech wares, such investment in technology is sure fire for our high tech industrilaization and reduce brain drain loss due to export of our professionals, with know how being produced in the country we can reduce if not elliminated the brain drain for technicians, scientists and engineers as well as researchers.

  • http://pulse.yahoo.com/_V6JTYBZXUSXIDCD67ACZK7NUKM Joseph

    The BSP knows what they are doing; they have my full confidence.

  • http://pulse.yahoo.com/_5UOZM4PWIDKO7G64HL3PPMXUTM Constantine

    With this huge reserves, Filipino investors can now go ahead with multi-billion investments in the country. Even if the inputs are imported, we won’t be having problems paying for it given the huge dollar reserves! 

    • http://pulse.yahoo.com/_V6JTYBZXUSXIDCD67ACZK7NUKM Joseph

      Not so fast: Thailand in 1997 had around $100bn in GIR. It was all used up in 1 week trying to defend the currency.

      Considering that $100bn today is worth less than $100bn in 1997, we should becareful to avoid the same mistakes.

  • Diablo_III

    wow. I think at the end of the year it will be $100B..

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