The country’s foreign currency reserves inched up in September due to deposits by the government and dollar-buying by the central bank to control the peso’s movements, data released on Monday showed.
The Bangko Sentral ng Pilipinas (BSP) said its gross international reserves (GIR) were enough to cover nearly a year’s worth of imports and about nine times the country’s short-term external debt.
The total GIR for September reached $83.03 billion, slightly higher than the $82.9 billion recorded the month before.
This was good for 11.9 months’ worth of imports and 8.7 times worth of short-term external debt based on original maturity.
Foreign exchange reserves, which are kept by the BSP, can serve as the country’s last line of defense against potential external shocks that can lead to a shortage of dollars that the country would need for the purchase of foreign goods and services, and loan payments.
“The increase in reserves was mainly due to inflows from foreign exchange operations and investments of the BSP, and net foreign currency deposits by the Treasury of the Philippines,” the BSP said in a statement.
“These inflows were partially offset by the payments made for maturing foreign obligations of the government and the revaluation adjustments on the BSP’s gold holdings,” the central bank said.
Net international reserves, which refer to the difference between the BSP’s GIR and total short-term liabilities, increased to $83 billion as of September from $82.9 billion the month before.
The BSP’s accumulation of international reserves is largely dependent on the amount of foreign currency that enters the Philippines. The major sources of the country’s dollar income are remittances from migrant workers, revenues from the growing business process outsourcing (BPO) industry and receipts from international tourists.
At the end of August, the country’s year-to-date balance-of-payments (BOP) position was at a surplus of P3.359 billion, lower than July’s $3.677 billion. The country’s BOP position is a summary of all its transactions with the rest of the world.
The BOP deficit was mainly driven by the flight of short-term foreign investments from the Philippines as the US economy showed further signs of recovery.
Foreign portfolio investments, or placements in stocks, bonds and government securities, stood at a net outflow of $441.85 million as of the end of August. This meant more foreigners sold out their interests in the Philippines.