Tuesday, 8 February 2011

Forex reserves climb further to $63.6b

by Roderick T. dela Cruz
Manila Standard

Bangko Sentral on Monday said its gross international reserves climbed further to a new record of $63.608 billion at the end of January, led by inflows from the peso-denominated global bonds issued by the government last month.

The January figure was up by $1.237 billion, or 2 percent, from the end-December level of $62.371 billion last year. The reserves rose $18 billion, or 39.5 percent, from $45.592 billion year-on-year.

The forex reserves over the past decade, grew fourfold from just $15.7 billion in 2001, as the economy began to record strong balance of payments surpluses.

At $63.6 billion, the foreign exchange reserves were more than enough to cover the country’s external debt estimated at $59.8 billion as of end-September 2010.

The government raised $1.25 billion from a 25-year global peso bond float in the first week of January to help plug the fiscal deficit.

“Foreign exchange inflows coming from the foreign currency deposits by the national government of proceeds from its peso-denominated global bonds issuance maturing in 2036, as well as the foreign exchange operations and income from investments abroad of Bangko Sentral, contributed to the appreciable increase in the reserves level,” Bangko Sentral Governor Amando Tetangco Jr. said.

The inflows were partially offset by payments for maturing foreign debt of the national government and revaluation losses on Bangko Sentral’s gold holdings, given the drop in gold prices in the international market.

Tetangco earlier said the bank was looking at a GIR level of $63 billion to $64 billion in 2011, although this figure is likely to be exceeded given the pace of foreign exchange inflows into the country.

Economists said the Bangko Sentral’s intervention in the foreign exchange market to temper the appreciation of the peso against the US dollar had been supporting the increase in the foreign exchange reserves.

The peso appreciated 5.4 percent against the US dollar in 2010, and continued this trend this year. On Monday, the peso closed at 43.63 against the greenback, up by P0.10 from the Friday’s close of P43.77 per dollar.

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