PH forex reserves back above $100B as of end-October

MANILA  -The Philippines government’s return to the retail market for US-dollar denominated bonds may have brought gross international reserves (GIR) back past the century mark after a four-month interlude, with a preliminary tally of $101.1 billion for end-October.

The GIR was last recorded above $100 billion at $100.59 billion at the end of May, and was at $98.12 billion at the end of September.

The Bangko Sentral ng Pilipinas said in a statement that the increase in October this was mainly due to inflows from the Retail Dollar Bonds 2.

READ: Investors snap up retail dollar bonds; BTr raises $611.2M

The Bureau of the Treasury tagged proceeds from this debt paper at $1.26 billion, which beefed up the national government’s net foreign currency deposits with the BSP.

There were also “the upward valuation adjustments in the value of the BSP’s gold holdings due to the increase in the price of gold in the international market, and the BSP’s net foreign exchange operations and net income from its investments abroad,” the central bank said.

Gold prices, overseas investments

The value of the BSP’s gold holdings went up to $10.57 billion in October or by 8 percent from $9.79 billion in September.

Also, BSP’s overseas investments increased by 2.2 percent to $84.79 billion from $82.99 billion.

“The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income,” the BSP said.

This metric is considered adequate if it can finance at least three-months’ worth of the country’s import bill.

Further, the BSP said the latest tally was also about 5.9 times the country’s short-term external debt based on original maturity and 3.7 times based on residual maturity.

Taking out the BSP’s reserve liabilities such as short-term foreign debt and credit and loans from the International Monetary Fund, preliminary data for October point to an increase in net international reserves of $2.3 billion — to $100.4 billion from $98.1 billion in September.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., observed that the end-of-month GIR tally has been increasing for most months over the past year.

Ricafort said this was somewhat correlated with the relatively stronger peso since October 2022 when the exchange rate with the US dollar reached a new record high of 59:$1 in the latter part of September 2022.

“But the [exchange rate] is now at 56:$1 levels and interestingly again below the previous record intraday high of 56.45 maintained for 18 years from 2004-Sept. 1, 2022,” he said.