Increasing the country’s yuan holdings remains an option for the Bangko Sentral ng Pilipinas (BSP) following the Chinese currency’s inclusion in the Special Drawing Rights (SDR) basket, Governor Amando Tetangco Jr. said on Tuesday.
“Investing in the yuan continues to be an option for the BSP, in line with its diversification policy to enhance the returns of international reserves as well as to diversify the currency composition,” Tetangco told reporters.
The addition of the yuan, also known as the renminbi, in the reserve currency basket maintained by the International Monetary Fund (IMF) would be positive for China, he added.
“I think the acceptability of the yuan will be further enhanced by the decision of the IMF.
Although, admittedly, this is something that’s been expected. For sometime now the markets, even the policymakers and reserve managers, have been anticipating the eventual inclusion of the yuan in the SDR basket,” Tetangco noted.
It will be natural for other countries to consequently increase the yuan composition of their international reserves, he said.
The central bank chief has previously said that the BSP’s yuan investments are mainly through the Executives’ Meeting of East Asia Pacific Central Banks’ (EMEAP) Asian Bond fund and the Bank of International Settlements’ (BIS) China fund.
Measured in US dollars, the country’s gross international reserves (GIR) as of October amounted to $81.14 billion. Seen as a buffer against external headwinds, the latest GIR level is enough to cover 10.4 months of merchandise imports and payments of services and income.
Tetangco also said the Philippine economy could look at the yuan as a medium of settlement of trade transactions, noting in particular that there was growing trade between China and the Philippines.
The BSP governor said China accounted for about 12 percent to 14 percent of Philippines exports and about 8 percent to 9 percent of imports.