PH forex reserves back on growth path, up $1.1B in Oct
After seven straight months of decline, the Philippines’ gross international reserves (GIR) rose by $1.1 billion to $94.1 billion in October from $93 billion in September, even as the Bangko Sentral ng Pilipinas (BSP) has been tapping this to prevent the peso from further sliding after weakening to 59 against the US dollar.
The increase, however, was mainly due to the issuance last month of $2 billion in multitranches of US-dollar denominated bonds, said Rizal Commercial Banking Corp. chief economist Michael Ricafort, who also noted a slight narrowing of the country’s trade deficit from record levels in recent months.
These inflows, however, were “offset by some foreign debt payments, some intervention in the foreign exchange market,” he added.
The BSP said in a statement the reserves still represented a more than adequate external liquidity buffer, now equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income.
Also, the reserves were about 6.7 times the country’s short-term external debt based on original maturity and four times based on residual maturity, which means that the country has more than enough foreign exchange on hand to service its needs.
“The month-on-month increase in the GIR level reflected mainly the national government’s net foreign currency deposits with the BSP, which include proceeds from its issuance of [the dollar-denominated bonds], and upward valuation adjustments in foreign currency-denominated reserves or nongold reserves,” the BSP said.
Ricafort said that in the coming months, the GIR could still rise due to the seasonal increase, especially toward the holiday season in the latter part of fourth quarter in remittances from overseas Filipino workers as well as inflows from other dollar sources.
These include revenues from business process outsourcing operations, foreign tourism, proceeds of the proposed US dollar-denominated retail bond issuance by the national government that would all help ease any pressure on the peso to lose more value against the greenback.
“But these could still be offset by foreign debt payments and possible foreign exchange intervention activities as signaled recently alongside other measures to help stabilize the peso and overall inflation,” Ricafort said.
In October, Finance Secretary Benjamin Diokno said the BSP could use $10 billion of the reserves to prevent the peso from depreciating too much against the US dollar, thus making imports and thereby a number of basic commodities much more expensive.
He clarified that was his personal opinion rather than a policy sanctioned by the Monetary Board, of which is one of seven members. Last month, the peso hit its record weakest position of 59:$1 four times—Oct. 3, 10, 13 and 17. INQ
