The country’s gross international reserves (GIR) reached their highest level in more than a year in February, boosted by increases in the national government’s net foreign currency deposits and foreign exchange income from its investment abroad.
The central bank may have also been able to build up its dollar reserves in the second month of the year as it tried to limit the strength of the peso against the US currency, an analyst said.
Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) on Friday showed that the GIR rose $620 million to $81.34 billion in February from $80.72 billion in January – marking the highest level recorded since the $83.19 billion posted in December 2013.
Dollar reserves in January were up $796 million from the $80.54 billion level recorded a year earlier.
The rise in the national government’s net foreign currency deposits and in foreign exchange income from its investment abroad “was partially offset by revaluation adjustments in the BSP’s gold holdings arising from the decrease in the price of gold in the international market, as well as on its foreign currency-denominated reserves, and payments made by the national government for its maturing foreign exchange obligations,” the BSP said in a statement.
BSP curbs peso strength
Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands (BPI) said the central bank was able to build up its level of GIR in the month of February as it stepped in to limit the sharp appreciation pressure of the peso.
“This trend may continue until the Fed hikes interest rates or sentiment turns away from the emerging markets,” he said.
Mapa also pointed out that among the emerging market space, the Philippines continues to attract a large proportion of flows to the region because of the country’s superior fundamentals.
“Thus, any depreciation trend [in the peso]will be limited,” he added.
Import cover extended
According to the central bank, the latest GIR level provides a buffer of 10.4 months’ worth of imports of goods and payments of services and income, up slightly from the 10.3-month import cover in January.
“It is also equivalent to 8.6 times the country’s short-term external debt based on original maturity and 6 times based on residual maturity,” the BSP added.