Renminbi now part of PH forex reserves

AFP PHOTO/TED ALJIBE

In line with the Duterte administration’s pivot to China, monetary authorities have included the Chinese renminbi in the Bangko Sentral ng Pilipinas’ official international reserves.

In a statement Monday, BSP Governor Amando  Tetangco Jr. said the policy-making Monetary Board approved the inclusion of the Chinese currency in its gross international reserves (GIR) effective Oct. 13.

“The BSP may hold renminbi as part of its GIR to ensure that the currency is available to the banking system when needed,” he said.

Before the inclusion of the renminbi, the country’s GIR was mainly held in the US dollar, gold and the International Monetary Fund’s special drawing rights (SDR).

“In deciding to make the renminbi Philippine reserve-eligible, the Monetary Board took into consideration the inclusion of the renminbi effective Oct. 1 in the basket of reserve currencies that determine the value of the IMF SDR and the rising economic and financial importance of China that is expected to increase the use of the currency,” Tetangco explained.

Early this month, the IMF added the renminbi to its SDR basket, joining the US dollar, the euro, the British pound and the yen.

According to the IMF, the move “recognizes and reinforces China’s continuing reform progress (and) the renminbi’s inclusion is an important milestone in the integration of the Chinese economy into the global financial system.”

In the case of the Philippines, Tetangco said the Monetary Board “also took into consideration the country’s increasing economic linkages with China.”

Citing official data, Tetangco noted that Philippine exports to China grew 7.9 percent from 2010 levels to $6.2 billion last year, with shipments of Philippine-made goods to the mainland accounting for a tenth or $3.2 billion of total exports from January to July this year.

Imports from China jumped 2.5 times from 2010 figures to $11.5 billion in 2015. China has been the Philippines’ top source of imports from 2013 up to the present. As of July, imports from China accounted for 18.5 percent of the total value of imported goods that entered the country since January.