• Oct GIR hits 2-year low


    Down $4.3B from yr-earlier on gold revaluation, govt debt cost

    TABLEThe country’s gross international reserves (GIR) fell in October from September and from a year earlier on revaluation adjustments of the central bank’s gold and the cost of maturing foreign obligations of the national government, the central bank said on Friday.

    Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) showed that the GIR level at end-October stood at $79.30 billion, down by $300 million from September’s revised $79.60 billion.

    The October dollar reserves were also $4.31 billion lower from the $83.61 billion level recorded a year earlier. The level was the lowest since June 2012, when gross international reserves stood at $76.13 billion.

    GIR refers to foreign assets that are readily available to and controlled by the central bank for direct financing of payments imbalances. These consist of holdings of gold, special drawing rights, foreign investments, and foreign currency. Higher reserves provide monetary authorities with some flexibility in managing both the exchange rate of the peso and domestic inflation.

    According to the central bank, the latest GIR level provides a buffer of 10.8 months’ worth of imports of goods and payments of services and income, a slight reduction from the 10.9-month import cover in September.

    “It is also equivalent to 8.2 times the country’s short-term external debt based on original maturity and 6 times based on residual maturity,” the BSP said in a statement.

    “The outflows were partially offset by the net foreign currency deposits by the Treasurer of the Philippines, income from the BSP’s investments abroad, and revaluation adjustments on the BSP’s foreign-currency-denominated reserves,” it said.

    Operational requirements

    Justino Calaycay, analyst at Accord Capital Equities Corp., said that other than those already mentioned by the central bank, the decline in GIR could also be traced to some corporations that may have drawn down some dollars for their operational requirements.

    “The revaluations resulted from the drop in the price of gold in the world market and the recent strength in the dollar. We have also seen some foreign selling in the stock market and some of these funds may have been repatriated back to the US as the prospects for investments there improve,” the analyst explained.

    “Having said that, I don’t see this further drop in GIR levels as making any significant impact as it is but part of the normal cycles,” he added.

    The BSP had revised downward its earlier projection for full-year GIR to $85.3 billion from $88 billion after trimming its balance of payments surplus projection for this year to just $1 billion.


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