Strong peso sustains 4-mo uptrend in BSP’s dollar reserves

The country’s dollar reserves held by the central bank rose for the fourth consecutive month in February, thanks to the strong peso which had deterred fund managers and investors from shifting to the greenback.

In a statement, the Bangko Sentral ng Pilipinas said its preliminary data had shown that the country’s gross international reserves had risen to $82.9 billion as of the end of February 2019 from $82.49 billion as of the end of January 2019.

“This rise in the GIR level was due mainly to inflows arising from the BSP’s foreign exchange operations, net foreign currency deposits by the national government, and the BSP’s income from its investments abroad,” the central bank said.

The latest level is higher by $8.2 billion from its lowest level of $74.7 billion recorded in October 2018 and, more importantly, marks a substantial improvement in the country’s so-called import cover —the amount of imported goods and services the reserves can pay for—of only 6.8 times at the trough.

However, the increase in reserves was partially tempered by payments made by the government for servicing its foreign exchange obligations as well as revaluation losses from the BSP’s gold holdings, brought about by the decrease in the price of gold in the international market.

The end-February 2019 level of GIR serves as an ample external liquidity buffer and is equivalent to 7.3 months’ worth of imports of goods and payments of services and primary income.

It is also equivalent to 6.3 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 dollar reserves and total short-term liabilities, likewise increased by $410 million to $82.89 billion as of end-February 2019 from the end-January 2019 level of $82.48 billion.