Forex buffer hits 20-month high

MANILA, Philippines — The country’s foreign exchange buffer increased for the third straight month to hit a 20-month high of $82.13 billion in January due to strong inflows after the national government issued $1.5 billion worth of 10-year global bonds, according to the Bangko Sentral ng Pilipinas.

BSP Governor Nestor Espenilla Jr. said last month’s gross international reserves (GIR) level was 3.7 percent higher than the $79.19 billion recorded in December.

This was also the highest since reaching $82.17 billion in May 2017.

The GIR is the sum of all foreign exchange flowing into the country. It serves as buffer to ensure that the Philippines would not run out of foreign exchange that it could use to pay for imported goods and services, or maturing obligations in case of external shocks.

Espenilla said the increase could be traced to the net foreign currency deposits by the national government as well as the foreign exchange operations of the central bank.

The national government tapped the offshore debt market to raise $1.5 billion through the issuance of 10-year global bonds to provide budgetary support for the government.

He also cited the revaluation gains from the BSP’s gold holdings resulting from the increase in the price of gold in the international market as well as the central bank’s income from investments abroad.

Data showed the central bank’s gold holdings increased 3.1 percent to $8.41 billion in January from $8.15 billion in December, while its income from foreign investments went up 4.4 percent to $69.65 billion from $66.73 billion.

Espenilla said the increase in reserves was partially tempered by payments made by the national government for servicing its foreign exchange obligations.

“The end-January 2019 level of GIR continues to serve as an ample external liquidity buffer,” Espenilla said.

He said the buffer is equivalent to 7.2 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 6.2 times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity.