For the first five months, however, the BOP position remained well in surplus zone at $1.808 billion as strong inflows continued to support the country’s reserves despite payments of maturing government’s foreign obligations.
According to the BSP, the country’s gross international reserves (GIR) neared $21 billion in May, reaching another record-high level due to the combined impact of foreign exchange deposits from government borrowings early in the year as well as income from the central bank’s foreign exchange operations.
The BSP said the GIR reached $20.944 as of end-May, up by $92 million from April’s level of $20.852 billion.
According to the BSP, the preliminary May GIR level posted significant improvement from the central bank’s foreign exchange operations as well as from income from investments abroad which generated foreign exchange.
BSP Governor Amando M. Tetangco said the GIR provided ample reserves to keep the five-month BOP in surplus position despite two consecutive monthly deficits.
The GIR also still contained part of the proceeds of the National Government’s $2.1-billion borrowing early in the year which bankrolled almost two-thirds of its total borrowing requirement for the whole year.
Tetangco said the National Government and the BSP itself had to repay its forex-denominated obligations maturing in April, using up over $220 million of the surplus posted in the first quarter.
"But the January to May surplus is still sizeable," Tetangco said. "That is still a very healthy position."
The country’s BOP position had built up a record-high level in the beginning of the year as the Arroyo administration deposited the forex proceeds of its $2.1-billion commercial borrowing in January.
That deposit alone boosted the BOP in February to $2.032 billion and a continued inflow from investments, remittances and export earnings further boosted the balance to $2.121 billion in March.
The May BOP and the resulting four-month BOP was based on the revised figures of the BSP as it adjusted its accounting of the country’s gross international reserves and balance of payments to comply with the International Accounting Standard (IAS).
The BSP reported earlier that the BOP in February was actually $107 million, up from the $104 million originally reported last month.
The BSP said the revisions reflected the adjustments both due to late reports and the effects of the adoption of the IAS particularly regarding the shift to mark-to-market valuation.
The BOP is the sum of the country’s transactions with the rest of the world and a surplus position indicates that the country would have more than enough foreign currency to service its maturing foreign obligations.
A high BOP surplus would give the BSP ample room to support the peso when volatility is high, thus preventing wild fluctuations in the peso-dollar exchange rate.