PHFOREX RESERVES BREACH $100-BMARK
The country’s foreign exchange reserves rose to their highest level in history for the 12th consecutive month and, more importantly, breached the $100-billion threshold at the end of September due to the central bank’s currency market operations and the national government’s foreign loans.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said its gross international reserves, based on preliminary data, rose by $1.54 billion to $100.49 billion as of end-september 2020 from the previous month’s $98.95 billion.
“The month-on-month increase in the [dollar reserve] level reflected inflows mainly from the BSP’S foreign exchange operations and national government’s foreign currency deposits with the BSP,” the agency said.
These inflows were partly offset, however, by the revaluation losses from the BSP’S gold holdings resulting from the decrease in the price of gold in the international market and foreign currency withdrawals made by the national government to pay its foreign currency debt obligations.
The central bank said its latest gross international reserve level “represents a more than adequate external liquidity buffer, which can cushion the domestic economy against external shocks.”
This buffer is equivalent to 10 months’ worth of imports of goods and payments of services and primary income. It is also worth about 9.2 times the country’s short-term external debt based on original maturity and 5.4 times based on residual maturity.
Similarly, net international reserves—which refer to the difference between the BSP’S gross reserves and total short-term liabilities—increased by $1.53 billion to $100.48 billion as of end-september 2020 from the end-august 2020 level of $98.95 billion.
In general, a country’s dollar reservesareviewedtobeadequate if they can finance at least three months’ worth of the country’s imports of goods and payments of services and primary income. They are also considered adequate if they provide at least 100-percent cover for thepaymentof thecountry’s foreign liabilities, public and private, falling due within a year.