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By Maricel E. Burgonio, Reporter
THE country’s dollar reserves continued to
grow at double-digits last month compared with a year ago, the
Bangko Sentral ng Pilipinas (BSP) said.
In a statement, BSP Deputy Gov. Nestor Espenilla
Jr. said the country’s gross international reserves (GIR) rose to
$36.7 billion in April from $25.08 billion in the same month last
year. Although growing by 46 percent year on year, the April dollar
buffer grew by just 0.3 percent from the month before, slowing
further from the 0.9-percent rise from February to March.
Foreign exchange inflows went down to $342.02
million in April from $370.63 million in March due to risk aversion,
as investors pulled out of emerging markets like the Philippines in
light of a slowdown in the US, a key export market for those
economies.
Foreign exchange inflows consisted mainly of the
government’s deposit of proceeds from a $329.9-million Asian
Development Bank (ADB) loan for local government financing and
budget reform.
“These inflows were offset, however, by
payments of maturing foreign currency which denominated obligations
of the national government and the BSP,” Espenilla said.
Despite a decline in forex inflows, foreign
investments increased to $32.663 billion in April from $32.274
billion in March.
Gold reserves however went down to $3.584
billion from $3.834 billion month on month.
The BSP said the current GIR level can cover 6.2
months of imports of goods and payments of services and income. It
was also equivalent to 5.2 times the country’s short-term external
debt based on original maturity and 3.4 times based on residual
maturity, which includes the current portion of long-term
obligations.
The BSP forecast the country’s dollar buffer
to reach $37 billion by year-end from $33.751 billion last year.
A rising reserves level helps temper consumer
price increases, as the increasing amount of foreign exchange boosts
the peso’s value, thus pulling down the cost of imported goods.
Stronger reserves however may also become inflationary, as the surge
in foreign exchange inflows increases domestic liquidity or the
money supply.
The stronger peso arising from rising reserves
also allowed the government and corporations to prepay part of their
foreign debts.
The Institute of International Finance (IIF)
earlier said the Philippines’ foreign exchange reserves are
sufficient to cope with unfavorable global economic conditions. The
organization of the world’s leading lending institutions however
said the country’s reserves level was still the lowest among
emerging Asian economies.
In its regional overview, IIF said the
Philippines is projected to increase its reserves to $37.1 billion
this year. However, the country will account for the lowest share
among emerging economies, the combined buffer for which is expected
to reach $3.026 trillion.
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