The country’s foreign exchange reserves continued to grow in October and the Bangko Sentral ng Pilipinas said this further shielded the Philippines from the adverse effects of unfavorable economic developments abroad.
The gross international reserves (GIR) amounted to $75.8 billion as of the end of October, up 33 percent from $57.15 billion a year ago. The GIR in September stood at $75.17 billion.
According to the BSP, the rise in the country’s GIR was due mainly to its foreign exchange operations. In cases when upward pressure on the peso was significant, the central bank would intervene in the market by buying dollars to temper volatility.
The ability of the BSP to buy dollars from the market is aided by the country’s usual sources of foreign exchange inflows—remittances and investments in business process outsourcing.
The central bank said that while it adopted a policy of allowing a market-determined exchange rate, it would exercise its flexibility to intervene in the market from time to time to avoid too much volatility in the exchange rate.
The BSP said the increase in world prices of gold also aided the growth in the foreign exchange reserves in October. A portion of the country’s reserves are in the form of gold. Documents from the BSP showed that of the GIR in October, $7.9 billion were accounted for by the precious metal.
“The appreciable buildup in the reserves level resulted mainly from the foreign exchange operations and income from investments abroad of the BSP as well as revaluation gains in the BSP’s gold holdings,” the BSP said in a statement.
The BSP said the foreign exchange reserves as of October was enough to cover 11.2 months’ worth of the country’s usual imports. It was also 6.4 times the country’s foreign currency-denominated debts maturing within a year.
It said the country’s rising foreign exchange reserves were a major factor for the Philippines’ improved credit ratings. The reserves help ensure the country’s ability to service its obligations to foreign creditors.