BSP lauded for curbing peso rate swings and keeping ample GIR
THE Philippines’ gross international reserves (GIR) rose slightly to $80.32 billion in September, central bank data released on Wednesday showed, giving the country a bit more of a buffer against global shocks.
The rise—a slight 0.07 percent from August and 0.95 percent from $79.56 billion a year earlier—followed an easing in the prior two months.
The Bangko Sentral ng Pilipinas (BSP), in a statement, traced the uptick to its foreign exchange operations and income from investments abroad, plus net foreign currency deposits by the national government.
Dollar inflows were partially offset by national government payments of maturing obligations and revaluation adjustments to the central bank’s gold holdings and foreign currency-denominated reserves.
The latest GIR level is enough to cover 10.3 months of merchandise imports and payments of services and income, the BSP said.
It is also equivalent to 6.1 times the country’s short-term external debt based on original maturity and 4.4 times based on residual maturity, it added.
The central bank forecasts the country’s foreign reserves to reach $81.6 billion by yearend.
An analyst noted the BSP’s efforts to manage foreign exchange movements and maintain reserves at adequate levels.
“Typically the BSP would use its stock of reserves to help smoothen out any sharp fluctuations in the exchange rate, with August and September being two very volatile periods. We may have to commend BSP for its ability to help limit sharp swings with the exchange rates and still preserve its more than ample stash of GIR,” said Antonio Mapa, associate economist at the Bank of the Philippine Islands.
Mapa said the central bank was nimble enough to build reserves through the swap window, borrowing US dollars in exchange for pesos, especially with peso liquidity tight at the quarter’s end.
Another factor for the higher GIR, he said, was the revaluation of the BSP’s US Treasury holdings as Treasury prices climbed last month.
“At a time where most central banks have needed to draw down on their reserves, the BSP has been able to maintain its GIR levels all the while keeping sharp fluctuations in the exchange rate to a minimum,” Mapa said.
Emerging economies have been warned of capital outflows that would put pressure on reserves should the US Federal Reserve begin raising interest rates.