GIR remains high despite March dip


The Philippines’ gross international reserves (GIR) eased in March but remained ample to provide an 11.1-month buffer for the country, central bank data shows.

The GIR fell by $700 million to $79.80 billion last month from $80.50 billion in February. On a yearly basis, the gross dollar reserves slid from the $83.95 billion recorded in the same month in 2013. The GIR for 2014 is projected by the central bank at $88 billion.

The Bangko Sentral ng Pilipinas (BSP) traced the decline in dollar reserves mainly to outflows in the form of payments by the government of maturing foreign exchange obligations, foreign exchange operations of the central bank, and revaluation adjustments on the BSP’s gold holdings and foreign-currency denominated reserves.

However, these GIR outflows in March were partially offset by foreign currency deposits of the Treasurer of the Philippines (TOP), the BSP said.

“The GIR remains ample as it can cover 11.1 months’ worth of imports of goods and payments of services and income. The GIR level is also equivalent to 7.1 times the country’s short-term external debt based on original maturity and 5.2 times based on residual maturity,” BSP Officer in Charge Diwa Guinigundo said.

Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands, said the GIR recorded for March remains a very healthy level given the current external environment of the United States Federal Reserve tapering of its bond-buying program and the eventual interest hike in 2015.

“As such, the Philippines can still rest assured of foreign exchange reserves being kept at a healthy level as we are projected to continue to enjoy a current account surplus on the back of overseas Filipino workers [OFW] remittances, which have not failed us even during episodes of crisis,” he said.

Data from the central earlier showed that personal remittances sent by OFWs grew 6.8 percent in January to $2 billion, an indication of the strong overseas demand for Filipino labor.

GIR are foreign assets that are readily available to and controlled by the central bank for direct financing of payments imbalances and for managing the magnitude of such imbalances. It consists of holdings of gold, special drawing rights, foreign investments, and foreign exchange, including Reserve Position in the Fund. These assets are valued mark-to-market. Higher reserves help prop up the peso and keeps domestic inflation at bay.


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