Forex reserves rise to $85.7 Billion

MANILA, Philippines — The country’s foreign exchange reserves recovered in October, rising by $120 million to $85.7 billion from $85.58 billion a month earlier, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP Governor Benjamin Diokno said the improvement in the GIR level reflects the national government’s foreign currency deposits and BSP’s income from its investments abroad.

However, he said the increase was tempered by payments made by the national government for servicing its foreign exchange obligations.

The country’s foreign exchange reserves last September declined to $85.58 billion after settling at a three-year high of $86.03 billion in August.

The GIR is the sum of all foreign exchange flowing into the country. It serves as a 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.

“The end-October 2019 level of the GIR provides an ample external liquidity buffer,” Diokno said.

He said this is equivalent to 7.5 months’ worth of imports of goods and services and payment of primary income.

It is also equivalent to 5.5 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.

BSP data also showed that net international reserves (NIR), which refers to the difference between the BSP’s GIR and total short-term liabilities, likewise increased by $120 million to $85.69 billion from $85.57 billion in the previous month.

Strong inflows continued to beef up the GIR from sustained remittances, robust receipts from business process outsourcing and tourism as well as steady foreign investment inflows.

The BSP has raised the projected GIR level to $83 billion this year as it expects strong inflows of foreign portfolio investments as well as foreign direct investments.

In 2018, the country’s foreign exchange buffer narrowed by close to three percent to $79.19 billion from $81.57 billion after monetary authorities allowed the peso to depreciate to support the growing economy.