Reserves climb further in March

By Melissa Luz T. Lopez, Senior Reporter

GROSS international reserves (GIR) rose further in March for the fifth straight month, the central bank said on Friday, enjoying a boost from higher dollar deposits and income from offshore investments.

Dollar reserves picked up to $83.199 billion last month, climbing from the downward-revised $82.781 billion in February and the $80.511 billion tallied in March 2018, the Bangko Sentral ng Pilipinas (BSP) said.

This is the highest reserve level since October 2016, when the GIR stood at $85.106 billion.

In a statement, the BSP said the bigger dollar stash came on the back of inflows from the government’s foreign currency deposits. Income from the central bank’s investments abroad and its foreign exchange operations also padded the reserves, despite lower gold valuations and settlements of foreign debt.

Income from the BSP’s offshore investments rose to $71.025 billion in March, rising from $70.37 billion logged the previous month and the $64.931 billion level in March 2018. This accounted for bulk of the reserves.

Meanwhile, the country’s foreign currency stash dipped anew to $2.245 billion, sustaining a monthly drop since September. A stronger peso usually meant losses for the central bank, while a weaker currency pads the GIR.

The central bank uses the reserve money to temper sharp swings in the exchange rate. The peso weakened in March from the previous month, with the average logging at P52.4134 versus the dollar amid uncertainties here and abroad.

The month saw former Budget Secretary Benjamin E. Diokno appointed as new BSP chief, who said that he’s seeing room to ease policy rates and cut required bank reserves. March also saw global markets reel from fears of a recession, as growth in advanced economies soften further and yields on US Treasuries invert.

Some currency traders have said that the BSP likely bought more units in March as they sought to rebuild the reserves, coming from a seven-year low in 2018.

In contrast, the value of the BSP’s gold holdings dropped anew to $8.214 billion from $8.359 billion in February, reflecting lower gold valuations in the international market.

Reserves maintained under the International Monetary Fund (IMF) rose to $524.5 million versus $472.4 million the prior month. Special drawing rights — or the amount which the Philippines can tap under the IMF’s reserve currency basket — steadied at $1.191 billion.

The March GIR settled well above the $77-billion projection of the central bank for the entire year, and is higher than the end-2018 level of $79.193 billion.

The reserves can also cover up to 7.3 months’ worth of import duties. The central bank said this remains an ample liquidity buffer, logging well above the three-month global standard.

March’s GIR level is likewise equivalent to five times the Philippines’ short-term external debt based on original maturity, and 3.4 times when computed in residual terms.

The GIR has consistently been cited as a source of strength for the Philippines, as it serves as a buffer against external shocks.