Forex reserves eased slightly to $85.75B in October
The country’s foreign exchange reserves slightly slid to $85.75 billion in October from the record-high level in the previous month partly as global gold prices went down, the Bangko Sentral ng Pilipinas said Monday.
In a statement, BSP officer-in-charge Vicente S. Aquino attributed the lower gross international reserves (GIR) last month to “outflows arising from payments made by the national government for its maturing foreign exchange obligations, foreign exchange operations of the BSP and revaluation adjustments on the BSP’s gold holdings resulting from the decrease in the price of gold in the international market.”
Last September, the dollar reserves hit an all-time high of $86.14 billion as international gold prices rose that month.
The decline in GIR in October was nonetheless offset by the “reclassification of renminbi-denominated accounts from non-reserve eligible assets and the national government’s net foreign currency deposits,” Aquino said.
To recall, the BSP last October allowed the inclusion of the Chinese currency among its official international reserves, taking into consideration the country’s increasing economic linkages with China.
Before the inclusion of the renminbi, the country’s GIR were mainly held in the US dollar, gold as well as the International Monetary Fund’s special drawing rights.
The GIR level as of end-October could cover 10 months’ worth of imports of goods as well as payments of income and services. The dollar reserves were also equivalent to 6.1 times the short-term external debt based on original maturity and 4.4 times based on residual maturity. The BSP defines short-term debt based on residual maturity as outstanding foreign debt whose original maturity is a year or less, plus principal payments on medium- and long-term loans of the government as well as the private sector that are due within the next 12 months.
Due to weak global trade, the BSP had slightly cut its projected balance-of-payments (BOP) position for 2016, which monetary authorities expected to taper to a $2-billion surplus from the earlier projection of a $2.2-billion surplus.
The BOP is a summary of all the businesses the country does with the rest of the world. A surplus means the amount of dollars that entered the economy that year was more than the amount that left. –Ben O. de Vera
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