THE RECORD-HIGH level of dollar reserves held by the central bank will bode well for the local unit’s strength versus the dollar and for liquidity, according to economists.
The Bangko Sentral ng Pilipinas (BSP) on Friday released preliminary data which showed that gross international reserves (GIR) amounted to $86.393 billion as of end-November, up by 0.65% from the $85.834-billion level in end-October and also an increase by 14.15% from the $75.682 billion seen a year ago.
This marked the third straight month of continued increase in the GIR level.
“Sustained recovery in BSP’s foreign reserves probably resulted from intervention by the monetary authorities in the spot market to avoid an overshoot of the P50 level. This helped bolster overall liquidity further while avoiding the side effects of rapid peso strengthening,” Bank of the Philippines Islands Lead Economist Emilio S. Neri said in a text message to BusinessWorld.
This was echoed by Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.
“Record-high GIR fundamentally provides greater buffer/support for the peso exchange rate versus the US dollar,” he said in a text message.
“Higher GIR recently brought about by continued growth in OFW (Overseas Filipino remittances), BPO (business process outsourcing) revenues, foreign tourism receipts, POGO (Philippine Offshore Gaming Operator) revenues, as well as continued inflows of foreign investments into the country.
Latest data from the BSP also showed that gold reserves in the central bank, which are also included in the country’s foreign exchange buffer, was seen at $8.015 billion, unchanged for the sixth consecutive month since May. However, it stretched by 3.08% from its end-November 2018 level of $7.776 billion.
BSP data showed gains from the central bank’s investments abroad, which make up the bulk of the reserves, dipped to P73.466 billion from end-October’s $73.689 billion but still bigger compared to the $61.317 billion a year ago.
Meanwhile, foreign currency deposits grew to $3.169 billion from $2.385 billion in the succeeding month. It was also lower than the $4.932-billion level traced in end-November 2018.
Net international reserves, which refer to the difference between the BSP’s GIR and total short-term liabilities, rose by $560 million to $86.38 billion as of end-November from the end-October level of $85.82 billion.
Remittances are expected to rise in the holiday season. Latest BSP data showed that cash remittances jumped to $2.379 billion in September, an increase of 6.24% from the $2.237 billion in the same month a year ago.
Meanwhile, data from the Bureau of Internal Revenue showed the government collected $1.6 billion worth of withholding taxes from workers of POGOs and service providers from January to August. — L.W.T. Noble