Forex reserves breach $80-B mark
End-August level enough to cover a year’s importsBy Michelle V. Remo
Philippine Daily Inquirer
The country’s gross international reserves (GIR) surpassed the $80-billion mark in August, the highest ever recorded by the Philippines and a big boost to the confidence of the international financial community and foreign investors.
According to the Bangko Sentral ng Pilipinas, the GIR hit $80.78 billion as of the end of August, up 6 percent from $75.94 billion as of the same period last year. The latest amount of foreign exchange reserves was also about 1-percent higher than the $79.76 billion posted as of end-July.
The sustained rise in the GIR in August was attributed partly to the central bank’s foreign exchange operations. The BSP buys foreign currencies in the market from time to time to temper wild fluctuations in the peso-dollar exchange rate.
Supply of dollars in the market remained strong given the continued growth in remittances from overseas Filipinos and foreign investments mostly in peso-denominated instruments and in the country’s business process outsourcing (BPO) industry.
The rise in the country’s foreign exchange reserves was also traced partly to dollar deposits placed by the national government at the central bank.
The government borrows dollars through loans from foreign creditors or the issuance of foreign currency-denominated bonds. Before the government uses the proceeds from these loans and bond sales to repay maturing foreign debts, it usually parks the funds at the BSP, thus beefing up the country’s foreign exchange reserves.
The rise in the GIR was also traced to the increase in the prices of gold in the world market. Of the country’s foreign exchange reserves, $10.55 billion were in gold holdings.
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