GIR rises anew, Feb level up by $410M
THE Philippines’s dollar reserves grew anew in February after a slight dip in January, the Bangko Sentral ng Pilipinas (BSP) reported. In a statement on Thursday, BSP Governor Benjamin Diokno said the country’s gross international reserves (GIR) rose by $410 million to $109.08 billion as of end-february 2021. The end-january 2021 level was at $108.67 billion.
“The latest GIR level represents an adequate external liquidity buffer, which can help cushion the domestic economy against external shocks,” Diokno said.
This buffer is equivalent to 11.7 months’ worth of imports of goods and payments of services and primary income. It is also about 9.5 times the country’s short-term external debt based on original maturity and 5.4 times based on residual maturity.
The February GIR is also significantly higher than the $88.19 billion seen in February 2020.
The country’s GIR is the level of foreign-exchange holdings that are being managed by the Central Bank during a given period. The GIR is a crucial component of the economy as it is often used to manage the country’s foreign-exchange rate against excess volatility.
The Philippines’s GIR has been rising steadily for the whole of 2020 amid the pandemic, as the local currency remained strong against the US dollar.
The BSP attributed the increased GIR level to inflows mainly from the BSP’S foreign-exchange operations and income from its investments abroad.
These inflows were partly offset, however, by the revaluation adjustments from the BSP’S gold holdings due to the decrease in the price of gold in the international market and foreign-currency withdrawals of the national government from its deposits in the BSP to pay its foreign currency debt obligations.
The Philippines’s ability to shore up its dollar defenses amid the pandemic has been lauded by local and international economists.
In January, Fitch Ratings said the BSP’S ability to maintain a high level of GIR remains a credit strength for the economy.