Wednesday, 7 September 2011

Foreign exchange reserves target raised to $75b

by Roderick T. dela Cruz
Manila Standard

The Bangko Sentral now expects the country’s foreign exchange reserves to hit $75 billion by yearend, up from its earlier estimate of just $70 billion, on increased inflows of dollars into the country.

Bangko Sentral Governor Amando Tetangco Jr. said the gross international reserves, which refer to the country’s stock of foreign exchange as well as gold, may hit $74 billion to $75 billion by December 2011, after exceeding the previous target of $70 billion in July.

Tetangco said the GIR noted that as of end-July amounted to $71.88 billion, which was also revised upward from the previous figure of $70.9 billion, on account of higher gold prices and appreciation of other currencies against the peso.

“We expect better balance of payments surplus than earlier expected,” Tetangco told reporters Tuesday. “The BoP surplus in the first semester was substantially more than half of the target,” he added.

Latest data showed that the BoP surplus reached $6.286 billion in the first seven months of 2011, or 80.4 percent higher than $3.284 billion recorded a year ago. It is also nearing the full-year BoP surplus target of $6.7 billion.

Foreign exchange reserves rose as a result of the Bangko Sentral’s intervention in the currency market to temper the rapid rise of the peso against the US dollar.

Bangko Sentral Deputy Governor Diwa Guinigundo earlier said “barring any unforeseen event, we expect the BoP to continue to be resilient and the gross international reserves to continue to expand.”

“The reserve buildup is a consequence of favorable BoP development,” said Guinigundo.

Bangko Sentral set a foreign exchange assumption of 42 to 45 per dollar this year, which indicates it would be in the market if the foreign exchange exceeded the targeted range.

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