MANILA, Philippines - The country’s foreign exchange reserves grew 10.9 percent due to higher valuation of the gold holdings of the Bangko Sentral ng Pilipinas (BSP), as well as robust earnings from the overseas investments of the central bank.
In a statement, BSP Governor Amando Tetangco Jr. announced yesterday that the country’s gross international reserves (GIR) reached $75.965 billion in April or $7.477 billion higher than the $68.488 billion booked in the same month last year.
The country’s foreign exchange reserves, however, has been sliding for the third straight month this year after hitting an all-time high of $77.357 billion in January. The GIR slid down to $77.011 billion in February, $76.128 billion in March, and $75.965 billion in April.
The GIR is the sum of all foreign exchange flowing into the country.
Data showed that the BSP’s earnings from its overseas investments went up by 7.3 percent to $63.337 billion in April from a year-ago level of $59.003 billion while profits from foreign exchange operations surged 21.8 percent to $411.83 billion from $338.18 billion.
On the other hand, the central bank’s gold holdings jumped 36.7 percent to $10.386 billion in April from $7.598 billion in the same month last year as the value of gold in the world market continued to rise.
The country’s GIR level last month was $163 million lower than the $76.128 billion booked in March due to maturing foreign exchange obligations of the national government as well as the revaluation losses on the BSP’s gold holdings.
“Maturing foreign exchange obligations of the national government as well as the revaluation losses on the BSP’s gold holdings on account of the decline in the price of gold in the international market reduced the reserve level during the month,” Tetangco said.
He pointed out that the foreign exchange outflows last month were largely offset by income from investments abroad of the BSP as well as foreign currency deposits by authorized agent banks.
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.
The BSP chief said the end-April GIR level could cover 11.4 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 6.4 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 Philippines’ credit rating outlook to positive from stable, paving the way for a possible upgrade of the rating - that is currently two notches below investment grade - within the next six to 12 months.
With the series of upgrades, London-based Fitch Ratings rates the country’s sovereign credit at one notch below investment grade, while Moody’s Investors Service as well as S&P rate the country’s sovereign credit at two notches below investment grade with a stable outlook. - By Lawrence Agcaoili