PH forex reserves up at $77.83 billion

The country’s gross international reserves (GIR) of $77.83 billion as of end-August was more than the previous month’s $76.72 billion, the Bangko Sentral ng Pilipinas (BSP) reported.

The GIR level has been steadily declining since March this year, it lost $3.79 billion from $80.51 billion at the end of the first quarter to July’s $76.72 billion.

Aside from the usual reasons of the National Government (NG) withdrawing foreign exchange to pay for maturing loans, the GIR has declined since the BSP has had few opportunities to accumulate foreign exchange and assets while managing exchange rate volatility. On a year-on-year basis, the GIR was lower by almost $4 billion.

BSP Governor Nestor A. Espenilla Jr. in a statement said the GIR increased from July to August because of inflows “arising from the NG’s net foreign currency deposits as well as the BSP’s income from its investments abroad.”

“These were partially tempered by payments made by the NG for its foreign exchange obligations, foreign exchange operations of the BSP, and revaluation adjustments on the BSP’s gold holdings resulting from the decrease in the price of gold in the international market,” according to the statement.

The BSP considers the current GIR level as still adequate external liquidity buffer. At this level, it is equivalent to 7.5 months’ worth of imports of goods, and payments of services and primary income.

It is also 6.2 times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity. Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months, said the BSP.

As of end-August, the BSP has foreign investments of $61.68 billion, higher than the previous month’s $60.74 billion. Gold reserves however fell to $7.62 billion from $7.78 billion in July.

The central bank continues to assess that the current GIR level remains consistent with the country’s balance of payments (BOP) position which was in deficit of $3.71 billion as of end-July. This was more than what was reported same period in 2017 of $1.38 billion.

The BSP said the higher cumulative BOP deficit was partly due to the widening merchandise trade deficit from January to June because of the sustained increase in imports of raw materials and capital goods.