GIR continued steady climb in Dec 2022 to $96B

FILE PHOTO: A logo of Bangko Sentral ng Pilipinas (Central Bank of the Philippines) is seen at their main building in Manila, Philippines March 23, 2016. REUTERS/Romeo Ranoco

The Philippines’ gross international reserves (GIR) appears to have risen further in December 2022 by $887 million to a four-month high of $96 billion from $95.1 billion in November, thanks mainly to the rise in the value of gold as well as the Bangko Sentral ng Pilipinas’ (BSP) profitable investments abroad.

The BSP said preliminary data for December show that the GIR continued to represent a more than adequate external liquidity buffer, which was equivalent to 7.3 months’ worth of imports of goods and payments of services and primary income.

Such reserves are considered adequate if they can finance at least three-months’ worth of the country’s import bill. Thus, the GIR as of December was more than twice the minimum adequate amount.

The reserves were also about 5.9 times the country’s short-term external debt based on original maturity and 3.9 times based on residual maturity.

The BSP will make available the final readout for December on Jan. 19.

Forex operations

“The month-on-month increase in the GIR level reflected mainly the [BSP’s] net foreign exchange operations, the upward valuation adjustments in the value of BSP’s gold holdings due to the increase in the price of gold in the international market and net income from the BSP’s investments abroad,” the central bank said.

At the end of December, BSP’s earnings from its overseas investments were pegged at $81.32 billion, an increase of 1.3 percent from $80.3 billion a month earlier.

Also, the central bank’s gold holdings were valued at $9.28 billion, an increase of 3.6 percent from $8.96 billion.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., noted that these gains were offset by a $502-million decrease in the BSP’s foreign exchange holdings in December.

This meant that the BSP’s stock of foreign currency shrank by 35.5 percent to $912.4 million from $1.4 billion in November.

For most of December, the Philippine peso traded against the US dollar within the 55-56:$1 range.

This was a much stronger performance for the local currency, which traded at 56-59:$1 in November.

Before that, in October, the peso hit its record weakest position of 59:$1 four times — Oct. 3, 10, 13, and 17. The peso started 2022 at 51:$1.

Ronnel W. Domingo INQ