Forex reserves hit $36.2B in November

The country’s foreign exchange reserves bounced back in November to $36.2 billion from $35.7 billion in October, caused by the dramatic increase in gold prices and inflows from government borrowing.

A surge in the price of the precious metal, a fresh Asian Development Bank loan and income from central bank investments abroad were offset by payments of maturing government obligations.

The BSP said there was a significant revaluation gain of its gold holdings due to the sharp increase in the price of gold in the international market.

At this level, the BSP said the current GIR level was enough to cover 5.7 months of imports of goods and payments of services and income. The GIR was also equivalent to 3.7 times the country’s short-term external debt based on original maturity.

The BSP said the GIR was boosted by the $250-million inflow from the Development Policy Support Program borrowed by the National Government from the Asian Development Bank (ADB).

The BSP’s gold holdings were also revalued in November as gold prices went up to $770.60 per troy ounce from $729 per troy ounce a month earlier.

The inflows, however, were offset by payments of foreign debt. The BSP said it paid off about $94 million worth of debt while the National Government paid off $254 million of its maturing foreign obligations.

Although thinning slightly, this year’s GIR level was still higher than last year’s November GIR of $32.46 billion. Last year ended with the GIR at $33.751 billion and it has been steadily increasing since then.

The highest GIR level recorded so far this year was in July when it was recorded at $36.9 billion.

The BSP projected that the country’s GIR would reach $37 billion this year, expressing optimism that all things considered, the country’s balance of payments would still be at a surplus level.

Although reaching record highs this year, however, the BOP position has been under significant stress from the surges in oil prices that eroded the reserves.

The BSP said earlier the GIR would likely top $40 billion in 2009, at most $3 billion better than this year’s projected level of $36.5 billion to $37 billion, with the surge coming mainly from remittances from overseas Filipinos.

The GIR is the sum of all foreign exchange flowing into the country from exports of merchandize, earnings from businesses abroad, foreign borrowings, investments and remittances.