Boost from BSP purchases to stem peso climb
By Michelle V. Remo
The country’s foreign exchange reserves grew to $84.1 billion in March, driven partly by the central bank’s dollar purchases intended to help curb the peso’s appreciation.
The country’s foreign exchange reserves grew to $84.1 billion in March, driven partly by the central bank’s dollar purchases intended to help curb the peso’s appreciation.
The Bangko Sentral ng Pilipinas wants an export sector development agenda drawn up to ensure that the country’s foreign exchange reserves remain at a healthy level in the face of worsening global economic conditions.
Despite the increases in the country’s foreign exchange reserves in the past several years, the current level and the recent rate of growth may not still be good enough in the “new normal” global economy that requires an aggressive build-up of war chest against the volatility of foreign capital flows, a research from Bank of the Philippine Islands suggested.
The peso ended Thursday’s trading slightly higher than previous day’s close after the central bank reported that the country’s foreign exchange reserves hit another all-time high in January.
The country’s external liquidity remained solid in 2012, with the balance of payments registering another surplus and the foreign-exchange reserves hitting an all-time high, the Bangko Sentral ng Pilipinas has reported.
The Bangko Sentral ng Pilipinas sees no danger in allowing the country to further build up its foreign exchange reserves, now at a record $84 billion.
The country’s foreign exchange reserves are set to scale new heights this year and the next, as the Bangko Sentral ng Pilipinas expects the figure to hit $83 billion by the close of December, and $86 billion by end 2013.
The country’s foreign exchange reserves—now at a historic high of about $82 billion—may continue breaking records next year as expectations of faster economic growth and the probability of an investment grade fuel more dollar inflows.
The Bangko Sentral ng Pilipinas on Wednesday defended itself against criticism that the country’s rising foreign exchange reserves have hit excessive and imprudent levels, saying the accumulation of dollars has actually aided the economy in withstanding external shocks.
The country’s foreign exchange reserves, which recently breached the $80-billion mark, are seen to have hit an “excessive and costly” level.
The Bangko Sentral ng Pilipinas will diversify the investment outlets for the country’s foreign exchange reserves as the heavy exposure to US treasuries is no longer prudent given the declining value of the dollar.
The country’s foreign exchange reserves, after posting double-digit annual growth rates since 2004, are seen to stay nearly flat this year due to heightened global risk aversion that is tempering investments in portfolio assets from emerging markets like the Philippines.
