Hard currency continued to flow out of the country in the first month of the year due in part to the central bank’s efforts to smoothen out volatility in the peso and the government’s payments of its foreign loans.
As such, the country’s overall balance of payments position in January 2018 posted a deficit of $531 million, higher than the $9 million deficit record in the same month last year, the Bangko Sentral ng Pilipinas said on Monday.
The January level stands at already half of the central bank’s forecast for the entire year of a $1-billion deficit in the balance of payments, which is the aggregate net value of all dollar flows into and out of the Philippine economy for all types of transactions with foreign entities. Depending on the ebb and flow of foreign currency transactions during the war, however, the BOP position can swing from deficit to surplus and vice versa from month to month.
The central bank said that outflows in January 2018 stemmed mainly from its “foreign exchange operations” and payments made by the government for its maturing foreign exchange obligations.
These were offset by net foreign currency deposits of the government and income from the BSP’s investments abroad during the month in review.
Meanwhile, the final gross international reserve level as of end-January 2018 reached $81.2 billion, reflecting the BOP position for the same period.
At this level, the dollar reserves represent more than ample liquidity buffer and is equivalent to 8.2 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 5.9 times the country’s short-term external debt based on original maturity and 4.3 times based on residual maturity.
At the end of 2017, the country had $81.5 billion worth of foreign currency reserves serving as a buffer against the $863-million balance of payments deficit during the same period.
The central bank expects the BOP deficit to hit $1 billion this year, and the peso-dollar exchange rate to range between P49-P52 from 2018 to 2019.