PH likely to miss 2013 GIR goal

The country will likely end the year with a lower-than-expected level of foreign exchange reserves, due mainly to the drop in the value of gold in international markets.

The Bangko Sentral ng Pilipinas (BSP) said the country’s dollar reserves would fall short of the original projection for this year of $87 billion.

“It’s unlikely that we’ll meet that,” BSP Governor Amando M. Tetangco Jr. told reporters Friday evening.

“The GIR (gross international reserves) have been pulled down by the negative revaluation of gold,” he said.

Foreign exchange reserves serve as the economy’s last line of defense from external shocks that may cause a shortage in dollars that the country needs for imports and debt payments.

Due to the slow but steady recovery of economic conditions in the United States and Europe, the price of gold has fallen by nearly a third from its peak of around $1,700 per troy ounce to about $1,200 earlier this month.

Demand for gold, which is widely considered a safe commodity to hold, typically increases during times of crisis.

The value of gold in the country’s GIR held by the BSP stood at $7.75 billion at the end of November, accounting for 9.44 percent of total reserves. This was down 27.16 percent from the $10.64 billion in gold that made up 12.67 percent of the GIR in November of last year.

While the total GIR at the end of November reached a 10-month high of $84.02 billion, this was still $3 billion short of the $87 billion in reserves by the end of the year that the BSP originally assumed.

This means that had gold prices stayed stable, the forecast would have been met.

The GIR at the end of November was enough to cover 12 months worth of the country’s imports. It could also cover nine times the country’s external debt.