Bangko Sentral: GIR dips in October but reserves position remains healthy

Philippine foreign reserves dipped in October, pulled by the country's payments for maturing obligations as well as losses on the Bangko Sentral ng Pilipinas' gold holdings, data released Thursday showed.

Despite the dip, the country’s reserves position remains healthy.

Preliminary central bank data show gross international reserves (GIR) was at $83.4 billion as of end-October, lower than the revised $83.5 billion recorded a month earlier.

GIR, which cushions against external shocks, increased 2.04 percent annually in October from $81.747 billion in the same period in 2012.

The Philippines' latest reserves tally is enough to cover 8.6 times the country's debt maturing in 12 months and is equal to a year's worth of imports.

“The slight decline was mainly due to payments by the National Government for its maturing foreign exchange obligations and revaluation adjustment on the BSP's gold holdings,” central bank officer-in-charge Vicente Aquino said today.

Value of gold in the international market sustained a decline, as investors turn to other instruments amid volatility in the financial system.

Aquino also noted that inflows were from placements by the National Treasury and income from the central bank's foreign exchange operations and investments.

“As it is now, the GIR level is healthy. But what I don’t understand is why we aren’t accumulating more by buying foreign exchange,” University of Asia and the Pacific senior economist Victor Abola said in a telephone interview.

Abola said more reserves are needed to war chest against any risks from perceived financial volatility once the US Federal Reserve tapers its bond purchases.

“We can do a lot more to shield the economy,” he said, noting that sustained growth is still needed to boost employment that has belied a firm economy.

The Philippines economy grew by 7.6 in the first half, the fastest in Southeast Asia.

The Bangko Sentral forecasts Philippine GIR to settle at $83 billion by year-end. — OMG, GMA News

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