PH forex reserves rise to $80.18B
THE COUNTRY’S dollar reserves rose at end of January, pointing to steady inflows of foreign money into the economy at the start of the year.
Documents released by the Bangko Sentral ng Pilipinas (BSP) on Friday indicated that changes in the value of gold assets and other foreign currencies also contributed to the increase in the gross international reserves (GIR), which serve as a buffer for external shocks.
“The GIR level remains ample,” the BSP said in a statement, noting that the dollar stock was enough to cover more than 10 times what the country spends on imported goods and services every month.
At the end of January, the country’s foreign exchange reserves rose to $80.18 billion from $79.54 billion in December. The country’s reserves were enough to cover 8.3 times the external debt falling due within the next 12 months.
Net foreign currency deposits by the government, revaluation adjustments and income from the BSP’s overseas investments led to the increase in reserves, the central bank said. These were partially offset by foreign loan payments by the national government.
The increase in reserves points to a likely surplus in the country’s January balance-of-payments (BOP) position, which is an accounting of all transactions between the Philippines and the rest of the world.
The BOP is the difference between the amount of money that enters and leaves the country. Inflows come in the form of remittances, revenues from certain industries such as business process outsourcing (BPO) and tourism, investments and ex port sales. Foreign debt payments, the importation of goods and divestment by foreign funds are counted as outflows.
Excess foreign exchange that enters the country is often bought by the BSP from the open market to keep this surplus from affecting the peso’s value excessively. These dollars are then held as reserves.
A deficit in the BOP, meanwhile, prompts the BSP to dip into its reserves to release dollars into the economy, which helps stabilize the peso.
In 2014, the country posted a BOP deficit of $2.88 billion—the first deficit since 2004. Year-on-year, foreign exchange reserves were down by $3.65 billion in the same period.
