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State deposits, higher gold price lift Philippines' dollar reserves

Ramon Royandoyan - Philstar.com
State deposits, higher gold price lift Philippines' dollar reserves
Foreign reserves are assets held mostly as investments in foreign-issued securities, gold as well as foreign currencies like dollar and euro. Being the lender of last resort, the BSP manages reserves as a stand-by fund to help the economy stay afloat in times of external shocks.
STAR / File

MANILA, Philippines — The Philippines’ dollar reserves expanded in October due to higher foreign currency deposits from the national government and higher value of gold held by the central bank.

What’s new

Gross international reserves amounted to $107.95 billion as of October, up 1.3% month-on-month, the Bangko Sentral ng Pilipinas reported on Friday. 

Why this matters

Foreign reserves are built mostly of investments in gold and foreign that could protect the Philippine economy from external shocks. The BSP’s role as a lender of last resort is to manage these buffers. 

For this year, the BSP forecasts GIR to hit a record $114 billion, lower than its previous projection of $115 billion on expectations of higher withdrawals of the government to pay for its maturing foreign debts.

What the BSP says

In a statement, the BSP attributed the GIR increase last month to “the National Government's net foreign currency deposits with the BSP and upward adjustment in the value of the BSP’s gold holdings due to the increase in the price of gold in the international market.”

What an analyst says

In a commentary, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said: “For the coming months, GIR could still post new record highs amid continued growth in the country’s structural US dollar inflows especially OFW remittances, business process outsourcing (BPO) revenues, foreign investments especially foreign direct investments (FDIs), as well as some pick up in POGO revenues and tourism receipts.”

Other figures

  • The latest GIR level is equivalent to 10.8 months’ worth of imports of goods and payments of services and primary income. It also represents 7.8 time the Philippines’ short-term external debt based on original maturity and 5.4 times based on residual maturity.

PHILIPPINE GROSS INTERNATIONAL RESERVES

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