Forex reserves surpass $109 billion at end-Feb

The Bangko Sentral ng Pilipinas’ (BSP) foreign-exchange (forex) operations and income from its investments abroad propelled the country’s gross international reserves (GIR) to a two-month high of $109.08 billion as of the end of last month.

Preliminary central bank data showed on Thursday that the amount was 0.37 percent and 23.69 percent bigger than figures a month and a year earlier, respectively.

In a statement, the Bangko Sentral said the month-on-month increase reflected inflows mainly from its forex operations and income from overseas investments.

“These inflows were partly offset, however, by the revaluation adjustments from the BSP’s gold holdings due to the decrease in the price of gold in the international market and foreign currency withdrawals of the national government from its deposits in the BSP to pay its foreign currency debt obligations,” it added.

Latest BSP data showed that the national government’s foreign debt currently stands at P3 trillion.

The Bangko Sentral also said the latest dollar-reserves figure “represents an adequate external liquidity buffer, which can help cushion the domestic economy against external shocks.”

It is also enough to cover 11.7 months worth of imports, higher than January’s 11.6 months and February 2020’s 7.7 percent; 9.5 times the country’s short-term external debt based on original maturity; and 5.4 times based on residual maturity.

Net international reserves, which refer to the difference between GIR and total short-term liabilities, also increased to $109.08 billion as of end-February from $108.67 billion a month before.

The central bank projects these reserves to rise to $106 billion this year. This is equivalent to 10.9 months of import cover, with the support coming from current and financial account inflows.

Commenting on the data, Rizal Commercial Banking Corp. chief economist Michael Ricafort said these reserves could expand further on more foreign borrowings, narrower trade deficits, the continued reopening of the economy, and sustained recovery of global output.

“Offsetting factors that could temper any further rise in GIR include [the] possible widening of [the] trade deficit or faster recovery in imports [as] the economy reopens further and possible reduction of gains in foreign investments of Philippine government/residents amid the global bond market selloff recently though offset by US/global stock markets still lingering/posted new record highs recently,” he added.