End-February forex reserves dip slightly

The country’s foreign currency reserves dipped slightly at the end of February as regulators spent dollars to smoothen out volatility in the exchange rate, the Bangko Sentral ng Pilipinas said on Wednesday.

In a statement, the BSP said that its gross international reserves (GIR) level stood at $80.6 billion as of end-February 2018. This was marginally lower than the $81.2 billion level recorded in January 2018.

BSP Governor Nestor Espenilla Jr. said the decline was “due mainly to outflows arising from the foreign exchange operations of the BSP” as well as payments made by the national government for its maturing foreign exchange obligations.

Also contributing to the decline were revaluation adjustments on the BSP’s gold holdings resulting from the decline in the price of gold in the international market.

These were partially tempered by the national government’s net foreign currency deposits, which included proceeds from the new money component of its recent global bond borrowing under its liability management transactions, and income from the BSP’s foreign exchange operations.

“The end-February 2018 gross international reserves level represents more than ample liquidity buffer and is equivalent to 8.2 months’ worth of imports of goods and payments of services and primary income,” Espenilla said.

It is also equivalent to 5.9 times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity.

Net international reserves —which refer to the difference between the BSP’s gross reserves and total short-term liabilities—decreased by $600 million to $80.6 billion as of end-February 2018 from the end-January 2018 net reserve level of $81.2 billion.