Forex reserves climb to $82.09B

Due to BSP dollar purchases to temper peso rise


12:58 AM November 8th, 2012


The country’s foreign exchange reserves hit a new record high in October, fueled largely by the central bank’s dollar purchases to help temper the appreciation of the peso. MARK WILSON/GETTY IMAGES/AFP

The country’s foreign exchange reserves hit a new record high in October, fueled largely by the central bank’s dollar purchases to help temper the appreciation of the peso.

The gross international reserves (GIR) stood at $82.09 billion as of the end of October, up 8 percent from $75.83 billion a year ago and slightly higher than the previous month’s $82.03 billion.

The latest amount of reserves was enough to pay for 11.9 months’ worth of the country’s imports and 6.6 times the country’s foreign currency denominated debts maturing within the short term.

The Bangko Sentral ng Pilipinas said in a statement that its foreign exchange operations were one of the major reasons why the GIR rose further during the month. Another was its income from investments, which are mainly in US treasuries.

If not for the central bank’s dollar purchases, market players said the peso could have appreciated beyond the 41-to-$1 level.

The BSP said that while its policy was to allow the peso’s value to be largely market determined, it should intervene from time to time to avoid excessive volatility in the market.

The peso, which hovers in the 41-to-a-dollar territory, has risen by about 6 percent since the start of the year. This has elicited complaints from the export industry, which said its growth target for the year would likely be missed due to a difficult environment brought about by anemic global demand and a rising peso.

BSP Governor Amando Tetangco Jr. said the rise of the peso was a natural consequence of the country’s growing economy. With the positive sentiment on the Philippines, he said the country was attracting foreign portfolio investments.

“The peso has been strong in large part due to inflows, which are market reactions to our positive macro fundamentals,” Tetangco said.

Aside from foreign portfolio investments, other drivers of dollar inflows to the country are remittances and foreign investments in the business process outsourcing industry.

The BSP said it would continue to help temper any excessive rise (or fall) in the value of the peso, but added that it would not buy dollars to deliberately weaken the local currency against the greenback.

The BSP said there were adverse consequences on the economy of deliberately weakening the peso. While an appreciation of the peso makes Philippine-made goods more expensive and the export sector less competitive, it helps reduce the cost of imports.

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  • robrano

     That is the reason why they push the peso up. For to get the OFW remittances at a cheap rate, piling up dollar reserves at the expense of OFW families who get less and less pesos while prices in pesos increase and increase. The higher the peso is, the lower is its local purchase power. Many basic goods are already expensive like in countries with 10 times higher income than in RP. And with the big profit on high pesos, the big business is buying  around the world into foreign businesses. A real “pro poor” policy.

  • blainz

    Can’t the BSP accelerate paying off the principal of our foreign-denominated debt? That would maximize the effect of the peso’s strength, curb some of the steep rise, and free future generations from interest payments.

  • KpTUL

    This is recycled all the time. Last week they run this news. Can you be more creative Ms. Michelle V. Remo. This is bordering towards cheating. With a 0.06B difference from the previous month which was just published some days ago, do you think it is statically significant enough to merit another run of the story ? You need to learn some statistics! You are just lucky that this is not a peer-reviewed submission, otherwise you will be banned for one year coz you are just recycling your story. Come on, imporvise something ! You can do more than that !

  • tonyabs

    Govt should stop issuing global bonds in pesosince investors and  who bought the bonds in pesos would surely spectulate on pesos try to make the peso appreciate to earn more on said investment. No investor would put their money in pesos then peso would depreciate..     This is not the short term  treasury bonds that our govt sell good for 3 months-1 year term. This  a long term 25 years.

    If the govt want to help the OFW’s and BPO’ s and exporters STOP issuing Global bonds in pesos. Govt should sell bonds in USD to prevent appreciation of PESO.

  • Hayek_sa_Maynila

    “The peso has been strong in large part due to inflows, which are market reactions to our positive macro fundamentals,”

    It’s like saying “its natural and its perfectly fine that we let the health of the goose deteriorate since it has layed for us a lot of golden eggs anyway”

    The most important positive fundamental that the rating agencies saw in the PHL is its strong external position (high GIR), which is due in large part to our overseas Filipinos.

    Where are the much needed FDIs? where is PPP? Where is reform in the Bureau of Customs? Where are the high impact, low hanging fruit infra projects? Where are the tax policy reforms (sin, incentives rationalization)?

    Yes, there have been successes like BIR administrative reforms, removal of some corrupt officials in government but none of these achievements can justify inflicting unnecessary pain on OFs.

    Please study carefully whether the cost of unsterilized intervention is really high because if you find out that it is not, we will just have to continue building up our GIR until such time that investors find a new “darling” in the global markets. We need these reserves as an insurance against crisis episodes, anyway.

    • It’s No Time To Doubt Now

      Friedrich, you are beginning to be a pain in the azz. Our beloved President PNoy is doing everything to make us look good to foreign investors. Your incessant complaints and pet peeves will not get us anywhere. If you can’t be happy for us, just go with the flow. Go with Daang Matuwid. Besides, the low-hanging fruits will fall off on their own in due time.

      and may I humbly suggest:
      vote straight LP in 2013
      Ninoy 2.0 = Bam Aquino

      • KpTUL

        Poltical Dynasty ! Shame on you ! Stop using the pic of Ninoy ! You are such a manipulative freak !


        Thanks but I will vote for the Barrack Obama of the Philippines!  Jejomar Binay 2016!  Honestly, sa lahat ng presidentiables, si Mr. Binay lang ang pinaka-qualified.. Just look at Makati, it has continued to attract foreign investment!  Ang daming construction projects left and right, mga skyscrapers pa!  This is due in large part to the PEACE and ORDER sa makati.  And he is the only one who actively helps OFWs. So kayong mga may OFW sa inyong pamilya, 2016 is your chance to thank Mr. Binay for his hardwork and leadership!

      • It’s No Time To Doubt Now

        Far off.

      • dukaponte

        Si Binay ay marcos in the making. Hindi iyan bababa sa pwesto pag nakaupo na. Tingnan niyo na lang sa makati, ayaw ng bitawan.Una, siya ang mayor. sumunod asawa niya. sunod anak niya. sunod niyan apo niya at wala ng katapusan iyan basta meron perang nakataya.

      • caleb manong

        lol,diko yan iboboto magnanakaw yan eh….. lalo lng maghihirap pinas kpag si binay nanalo…dati na maganda makati ,kahit ng wala pa si binay,dumating si binay ngnakaw lng kasma asawa ,,,dimo ba alam may kaso gratf asawa nya,tanga ka kc magbasa ng malaman mo..

      • Hayek_sa_Maynila

        Who says I’m not happy? I am happy and I want to the whole PHL community to become increasingly happy by helping in the discussions that will help us avoid the risks that a rapid appreciation can do to our country

        …kung wala akong malasakit e di tatahimik na lang ako. I have no problems with a rising stock market and lower interest rates but a strong peso is destructive and the reason why I make these comments is to avoid the bust we experienced in the 80s and 90s.

        Kung wala akong paki alam bakit pa ako mag aaaksaya ng oras mag komentaryo dito?

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