MANILA, Philippines - The country’s foreign exchange reserves surged 21.3 percent in January due to strong inflows from the dollar bond issuance of the government as well as the revaluation of the gold holdings and robust earnings from overseas investments of the Bangko Sentral ng Pilipinas (BSP).
BSP Governor Amando M. Tetangco Jr. announced yesterday that the country’s gross international reserves (GIR) reached a record high of $77.043 billion in January or $13.5 billion higher than the $63.54 billion booked in the same month last year.
The new figure eclipsed the previous all-time high of $76.206 billion recorded in November last year.
“The build-up in the reserves was due mainly to foreign exchange inflows coming from the foreign currency deposits by the National Government of proceeds from its dollar-denominated 25-year global bond issuance,” Tetangco said.
The Philippines sold $1.5 billion worth of dollar-denominated bonds due 2037 early last month. The government plans to borrow $4.02 billion from external sources this year of which $2.25 billion to $2.5 billion would come from the commercial debt market while $1.77 billion would be sourced from multilateral lending agencies in the form of program and project loans
Tetangco also traced the increase to the revaluation of the BSP’s gold holdings as well as income from its investments abroad.
Data showed that the central bank’s gold holdings jumped 35.2 percent to $8.895 billion last month from $6.581 billion in the same month last year while investments from abroad went up by 19.9 percent to $65.984 billion from $55.032 billion.
Likewise, special drawing rights (SDR) from the International Monetary Fund (IMF) increased by 13.1 percent to $1.285 billion from $1.136 billion.
On the other hand, BSP’s earnings from foreign exchange operations retreated by 7.5 percent to $401.42 million in January from $433.75 million in the same month last year due to the steady appreciation of the peso against the dollar.
The BSP chief pointed out that the inflows were partially offset by outlows consisting of payments of maturing foreign exchange obligations by the government and the central bank.
The GIR is the sum of all foreign exchange flowing into the country. The strong external payments position gives the country enough buffer to survive external shocks arising from the economic uncertainties in advanced economies led by the US as well as the sovereign debt crisis in Europe.
Tetangco said the end-January GIR level could cover 11.3 months worth of imports of goods and payments of services and income as well as 10.8 times the country’s short-term external debt based on original maturity and 6.9 times based on residual maturity.
The BSP sees the country’s GIR hitting a record level of $79 billion this year. The end-2011 GIR reached $75.302 billion and was lower than the revised full-year target of $76 billion.
New York-based Standard and Poor’s (S&P) recently raised the credit rating outlook to positive from stable paving the way for a possible upgrade of the rating that its currently two notches below investment grade within the next six months to 12 months. - By Lawrence Agcaoili (