PH gross foreign reserves hit 7-mth high

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$82.06B in May, up slightly from April but still below yr-earlier

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The Philippines’ gross international reserves (GIR) hit a seven-month high of $82.06 billion in May with just a slight gain from April, but still fell below the year-earlier level, data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday showed.

The BSP traced the month-on-month increase to inflows from the central bank’s income from investments abroad, as well as higher prices of gold and deposits by the national government.

The central bank provided no explanation for the $860 million drop from May 2016.

Gross reserves in May rose 0.06 percent or about $50 million from $82.01 billion in April. The May level marked the highest since the GIR reached $85.10 billion in October 2016.

However, the gross reserves were down 1.03 percent from $82.92 billion in May 2016.

The GIR is the sum of the country’s transactions with the rest of the world, which consist of the reserve position with the International Monetary Fund, foreign exchange holdings, gold reserves, special drawing rights (SDRs) and foreign investments.

Net international reserves—the difference between the GIR and total short-term liabilities—rose to $82.05 billion from $82 billion in April.

Analyst’s take

Bank of the Philippine Islands Vice President and lead economist Emilio Neri Jr. said the monetary authorities may have taken the opportunity to buy US dollars on the spot market in May as foreign portfolio flows continued to recover.

Despite the declaration of martial law over Mindanao last month following the siege of Marawi City in Lanao del Sur by the ISIS-inspired Maute group, the local stock market remained generally stable, showing some reaction only the day the news of the initial clash with government troops broke. The fighting has now entered its third week.

“[The end-May GIR] is a welcome development as the BSP may need these additional reserves should the upcoming FOMC [Federal Open Market Committee] rate hike (June 14) lead to a reversal of portfolio flows,” Neri replied to a Manila Times query.

Import cover
The country’s foreign reserves in May were enough to cover 9.1 months worth of imports, the same import cover in April, but lower from 9.7 months a year earlier, the central bank said.

Against the country’s foreign debt, the GIR in May was equivalent to 5.3 times the short-term external obligations due within one year and 3.7 times based on residual maturity, the BSP said.

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