BSP hikes GIR forecast

MANILA, Philippines - The continued surge in inflows have prompted the Bangko Sentral ng Pilipinas (BSP) to hike its gross international reserves (GIR) forecast for 2012.

The country’s foreign exchange reserves are expected to reach a new record-high of $83 billion this year, up from the $77.5-$78 billion range seen in June, BSP Governor Amando Tetangco Jr. told reporters yesterday. The figure is seen to increase further to $86 billion in 2013.

Reserves, which amounted to $82.093 billion as of October, serve as buffer funds in times of external shocks.

An improvement in the country’s balance of payments (BOP) position could account for the upgraded forecast, Tetangco said. “Effect is seen to carry over to 2013 GIR,” he said.

BOP summarizes the country’s transactions with the rest of the world, which includes inflows such as investments and remittances as well as outflows such as imports. A surplus indicates the country has enough resources to settle its external trade and debt obligations.

Last week, the inter-agency Development Budget and Coordination Committee – the body that approves macroeconomic targets – approved the revised BOP forecast of $6.8 billion surplus for 2012, up from June’s $2.6 billion.

Sought for comment, Jonathan Ravelas, chief market strategist at BDO Unibank Inc., said the dollar-buying exercises by the BSP to temper a rising peso “also has impact” on GIR rise.

The central bank, despite generally keeping a market-determined exchange rate, has left scope for intervention to avoid sharp swings in the peso’s value which can be detrimental to businesses and the economy.