MANILA, Philippines - The country’s foreign exchange reserves declined in November after hitting its highest level in nearly two years in October, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
BSP Governor Amando Tetangco Jr. said the country’s gross international reserves (GIR) reached $80.57 billion in November, $525 million lower compared to $81.09 billion in October.
The foreign exchange level in October was the highest since December 2013 when the country’s foreign exchange reserves hit $83.18 billion and was close to hitting the full-year GIR target of $81.6 billion set by the central bank.
The GIR is the sum of all foreign exchange flowing into the country. The reserves serve as buffer to ensure the Philippines would not run out of foreign exchange that it could use to pay for imported goods and services, or maturing obligations in case of external shocks.
If it deems necessary, the BSP buys dollars from the foreign exchange market to prevent a sharp depreciation of the peso against the dollar. It can also sell to avoid sharp appreciation of the local currency.
Tetangco traced the decline in GIR last month to higher foreign debt payments by the national government as well as the lower gold prices in the world market.
“The decrease in reserves as of end-November 2015 was due mainly to revaluation adjustments on the BSP’s gold holdings resulting from the decrease in the price of gold in the international market and payments by the national government for its maturing foreign exchange obligations,” he said.
The value of the BSP’s gold holdings fell 6.7 percent to $6.7 billion in November from $7.18 billion in October. The central bank’s overseas investments likewise slipped t to $71.08 billion from $71.36 billion.
On the other hand, the BSP’s foreign exchange operations yielded $1.17 billion in end November or 25.3 percent higher compared to the end October level of $931.6 million.
Tetangco said the end November GIR level remains ample as it can cover 10.3 months’ worth of imports of goods and payments of services and income.
The BSP chief added the GIR level was also equivalent to six times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity.
The BSP expects the Philippines to end the year with about $81.6 billion in dollar reserves. It also sees the country’s balance-of-payments (BOP) position to post a surplus of about $2 billion, a reversal of the $2.9 billion deficit recorded last year.
The country’s strong macroeconomic fundamentals would help the Philippines survive external shocks brought about by uncertainties caused by the impending interest rate hike by the US Federal Reserve as well as the economic slowdown in China.
Tetangco earlier said the central bank is finalizing revisions of the BOP position data particularly on trade as well as portfolio investments.