June 17, 2019
THE Bangko Sentral ng Pilipinas (BSP) expects an increase in gross international reserves (GIR) this year on the back of its positive outlook on foreign portfolio investment flows.
“In the case of gross international reserves, the projection for this year has been revised upward to $83 billion from $77 billion back in November. That largely reflects the continued inflows through the current account, as well as the recovery in portfolio flows,” BSP Department of Economic Research Director Dennis Lapid said in a briefing last Friday.
GIR are foreign assets that are readily available to and controlled by the central bank for direct financing of payments imbalances and for managing the magnitude of such imbalances. It consists of holdings of gold, special drawing rights, foreign investments and foreign exchange, including reserve position in the fund.
The BSP revised its 2019 projection for foreign portfolio investments, also called “hot money” — called as such because of the ease by which these can be taken in and out of an economy — to a net inflow of $4 billion, reversing its previous forecast of a $200-million net outflow.
Latest data show that the country’s dollar reserves rose to a 31-month high of $85.022 billion in May on the back of the government’s foreign-currency deposits, the Bangko Sentral’s foreign-exchange operations and investment income, as well as higher gold prices.
The figure — the largest since October 2016’s $85.105 billion — was also 1.36 percent and 7.3 percent higher, respectively, than the $83.878 billion posted in April and $79.202 billion a year ago.
The increase was due “mainly to inflows arising from the national government’s net foreign-currency deposits, BSP’s foreign-exchange operations and income from its investments abroad, and revaluation gains from the BSP’s gold holdings, resulting from the increase in the price of gold in the international market,” Bangko Sentral Governor Benjamin Diokno said in a June 7 statement.
These were partially tempered by national government payments for forex obligations, he added.
The latest reserve level was enough to cover 7.5 months worth of imports, higher than the buffer posted in April (7.4 months) and a year ago (7.3 months).
It was also equivalent to 5.1 times the country’s short-term external obligations due within one year and 3.6 times based on residual maturity.
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