$93-B forex breaches 2020 goal

Incline in GIR could be owed primarily to the national government’s foreign currency deposits to the central bank

Gross international reserves (GIR) hit new highs in June as it rose to $93.32 billion, translating to a new record-high from $93.29 billion a month-ago as the government jacks up borrowings to fund pandemic responses.

The June GIR figure has already surpassed the revised BSP’s assumption for such, which is $90 billion by end-2020.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed the incline in GIR could be owed primarily to the national government’s (NG) foreign currency deposits to the central bank.

“These inflows were offset, however, by the foreign currency withdrawals made by the NG to pay its foreign currency debt obligations,” the BSP explained.

Ample liquidity buffer

The central bank said that the latest

GIR figure is more than enough to cover the economy against external shocks, having 8.4 months’ worth of imports of goods and payments of services and primary income.

“Moreover, it is also about 7.3 times the country’s short-term external debt based on original maturity and 4.8 times based on residual maturity,” the BSP said.

Net reserves also hit high

“Net international reserves, which refers to the difference between the BSP’s GIR and total short-term-liabilities, increased by $50.2 million to $93.32 billion as of end-June 2020 from the end-May 2020 level of $93.27 billion,” it added.

The BSP earlier explained that having enough GIR will help ensure availability of foreign exchange to meet the country’s balance of payments’ financing needs, such as payment of import and debt service and in extreme conditions when there are no export earnings of foreign loans.

PHOTOGRAPH COURTESY OF LT GROUP More labs for testing Philippine Red Cross chairman Senator Richard Gordon (second from left) leads the inauguration of PRC’s sixth molecular lab located in Batangas City. Donated by LT Group Inc., the listed holding firm of tycoon Lucio C. Tan, the new lab is capable of conducting 4,000 COVID-19 tests daily using its own automated RNA Extraction and Polymerase Chain Reaction machine. Joining Gordon are (from left) LT Group chief finance officer Jose Gabriel Olives; Raul Academia of tocacco firm PMFTC and Asia Brewery vice president Dr. Rocky Rivera.