Foreign reserves up to new record of $103.8 billion in October

MANILA, Philippines — Foreign reserves peaked to a new all-time high last month, latest data from the Bangko Sentral ng Pilipinas (BSP) showed.

Gross international reserves totaled $103.81 billion as of end-October, 3.36% up from previous month’s level of $100.44 billion, BSP Governor Benjamin Diokno told reporters in a Viber message on Friday.

Reserves, which serve as buffer funds in times of external shocks, were sufficient to cover 10.3 months worth of imports of goods and services. Funds were also equivalent to 5.4 times of the country’s short-term external debt based on remaining maturity.

Increasing reserves have been repeatedly highlighted by economic officials as sign that the Philippines economy remained healthy despite staying in recession in the third quarter. 

On the other hand, economists have pointed out how reserves are being propelled by tepid demand for dollars because imports have been imploding since April 2019 while consumer demand remained weak because of the health crisis.

According to Diokno, three factors prompted the increase foreign reserves last month. First, foreign exchange operations by BSP, essentially the buying and selling of currencies to manage the peso’s fluctuations, added $3.46 billion. 

Hefty borrowings abroad that get exchanged into pesos also prompted the Duterte government to add to the pile $77 million in the form of foreign currency deposits, data showed. 

Finally, higher gold prices in the global market increased the value of BSP’s gold holdings by $49 million.

Reserves are composed of foreign exchange representing most traded currencies like Japanese yen, US dollar and the euro, gold, foreign investments managed by BSP, special drawing rights, as well as fund placements and contributions with the International Monetary Fund, a multilateral agency.