Forex reserves hit new record high of $45.43 billion

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) reported yesterday that the country’s gross international reserves (GIR) went up by 15.7 percent to a new record high of $45.43 billion in January on the back of strong foreign exchange inflows brought about by higher government deposits and the central bank’s robust earnings.

BSP officer-in-charge Armando Suratos said in a statement that the GIR increased by $6.18 billion from $39.25 billion registered in January of 2009 and by $1.2 billion from the end-December level of $44.24 billion.

“The increase in the GIR level was due mainly to foreign exchange inflows from the government’s deposits of the proceeds from the reopening of its two bond issuances maturing in 2020 and 2034, as well as the BSP’s strong foreign exchange operations and income from its investments abroad,” Suratos stressed.

The GIR is the sum of all foreign exchange flowing into the country.

According to him, higher government deposits also boosted the country’s GIR level last month.

The Philippines successfully raised $1.5 billion last month after it reopened its US dollar denominated bonds due 2020 and 2034. Last year, the government’s foreign commercial borrowing amounted to $3.25 billion to raise much needed funds to plug the record budget deficit of P290 billion.

He pointed out that the increase in GIR could also be attributed to the central bank’s higher earnings from investments abroad, the increase in the value of its gold holdings, and stronger foreign exchange operations.

Data revealed that the central bank’s foreign investments expanded by 12.7 percent to $37.97 billion in January from $33.68 billion in same month last year. The amount was also 3.5 percent higher than the end-December level of $36.655 billion.

On the other hand, the value of the central bank’s gold holdings surged by 18.2 percent to $5.399 billion last month from $4.567 billion in the same month last year.

Suratos explained that the increase in GIR was partially offset by outflows arising from the payment of maturing foreign exchange obligations by the government and the central bank.

“These receipts were partly offset by outflows arising from the payment of maturing foreign exchange obligations of the government, foreign currency withdrawals by authorized agent banks, and revaluation losses on the BSP’s gold holdings due to a drop in the price of gold in the international market in January following recent gains in the dollar,” he added.

Statistics showed that the value of the BSP’s gold holdings was 1.1 percent lower than the end-December level of $5.459 billion.

The current GIR level, he said, could cover 9.2 months of imports of goods and payments of services and income. It is also equivalent to 10.1 times the country’s short-term external debt based on original maturity and 5.4 times based on residual maturity falling due in the next 12 months.

The BSP sees the county’s GIR hitting a new record high of between $47 billion and $48 billion this year on the back of the government’s strong external liquidity position.

In 2009, the country’s reserves jumped close to 20 percent to a new record high of $45.033 billion from $37.55 billion in 2008 due to strong inflows, government deposits, and the increasing value of the central bank’s gold holdings.

The actual reserves slightly exceeded the latest forecast set by the BSP of between $44.5 billion and $45 billion for last year.