The country’s dollar reserves rose slightly in November as the relative strength of the peso in the weeks following the central bank’s aggressive string of rate hikes pushed many dollar holders to liquidate their positions.
Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed the country’s gross international reserves rose to $75.49 billion as of end-November 2018.
This was higher than the $74.71 billion level recorded in October 2018 due mainly to inflows arising from BSP’s foreign exchange operations and its income from its investments abroad.
However, the increase in the dollar reserve level was partially tempered by the payments made by the national government for its foreign exchange obligations and its net foreign currency withdrawals as well as the revaluation adjustments on the BSP’s gold holdings resulting from the decrease in the price of gold in the international market.
In a statement, BSP Governor Nestor Espenilla Jr. said the end-November 2018 dollar reserve level “continues to serve as an ample external liquidity buffer.”
It is equivalent to 6.9 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 5.8 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.
Net international reserves – which refer to the difference between the BSP’s total dollar reserves and total short-term liabilities – likewise increased by $0.78 billion to US$75.47 billion as of end-November 2018 from the end-October 2018 level of $74.69 billion.
The central bank has so far raised interest rates by a total of 175 basis points since May of this year in an effort to control the inflation surge. The resulting higher interest rates for Philippine assets has deterred some of the foreign currency outflows of recent months that were responsible for the decline in dollar reserves in prior months. /kga