Saturday, 8 October 2011

September GIR Settles At $75.64B

Manila Bulletin

MANILA, Philippines — The country’s gross international reserves (GIR) as of end-September amounted to $75.64 billion, lower compared to August’s $75.94 billion, the Bangko Sentral ng Pilipinas (BSP) reported Friday.

The full-year GIR projection was $70 billion and, in an interview, BSP Governor Amando M. Tetangco Jr. said the forecast will be adjusted higher with the rising external accounts, boosted by capital inflows and remittances, and with the balance of payments now at $9 billion.

“GIR is climbing and our strategy in managing (external accounts) is diversification,” said Tetangco.

In a press statement, the BSP said foreign exchange operations and BSP’s income from investments abroad as well as revaluation gains on its gold holdings on account of the increase in gold prices in the international market contributed to the stable GIR levels.

The September reserves are sufficient to cover 11.1 months worth of imports of goods and payments of services and income. The current level is also equivalent to 10.6 times the country’s short-term external debt based on original maturity and 6.3 times based on residual maturity.

Of the total GIR, about $66.09 billion are BSP’s foreign investments and $7.45 billion are gold holdings, and both amounts are lower compared to previous data of $66.41 billion and $7.55 billion, respectively.

The Philippine foreign exchange reserves have provided an important buffer for the country, especially during the economic and financial crisis. The GIR and the BOP surplus reflected the country’s strong exports, remittances, sovereign bond issuance, and other capital inflows.

In the past weeks with the peso-dollar exchange displaying increased volatility, the BSP has been active in the foreign exchange (FX) market and has been unwinding FX swaps as an intervention.

Tetangco said the level of the central bank’s short and long positions in FX forwards and futures will likely decline further as they unwind more which as of August has reached $12.8 billion, lower than July’s $16 billion.

BSP could wind down FX swaps to return some of the liquidity into the system, which would ultimately impact on the levels of both peso and dollar liquidity, and the exchange rate.

Including FX swaps, the country’s FX reserves total $88 billion in the first eight months.

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