Forex reserves hit new record high of $66.2 B

MANILA, Philippines - The country’s gross international reserves (GIR) surged to a new all-time high of $66.19 billion as of end-March after the Bangko Sentral ng Pilipinas (BSP) booked foreign exchange inflows from the proceeds of the National Government’s global bond issuance as well as the steady rise in the central bank’s overseas investments and foreign exchange operations as well as the higher value of its gold holdings.

BSP officer-in-charge Juan de Zuniga Jr. said last month’s GIR was 45 percent or $20.59 billion higher than the $45.6 billion booked in the same month last year and 3.6 percent higher or $2.3 billion more than the February level of $63.89 billion.

The GIR is the sum of all foreign exchange flowing into the country.

De Zuniga traced the increase to the proceeds of the $1.5-billion global bonds issued by the National Government last month as well as the higher foreign exchange earnings of the BSP.

“The appreciable build-up in the GIR level was due mainly to foreign exchange inflows coming from the proceeds of the National Government global bond issuance on March 30, foreign exchange operations and income from investments abroad of the BSP, and ravaluation gains on BSP’s gold holdings on account of rising gold prices,” he stressed.

The Philippine government raised $1.5 billion from the sale of 15-year dollar denominated bonds due 2026 to plug the country’s budget deficit. The country borrows heavily from foreign and domestic creditors to rein in the country’s budget deficit to P300 billion this year from a record level of P314.4 billion in 2010.

Data showed that the central bank’s income from investments abroad jumped 51 percent to $57.18 billion in March from $37.89 billion in the same month last year and 3.75 percent more than the end-February level of $55.11 billion.

The income of BSP from foreign exchange operations fell by 19.4 percent to $418.29 million in March from $519.31 million in the same period last year but surged 35 percent from the end-February level of $309.76 million.

Likewise, the data showed that the value of the central bank’s gold holdings went up by 19 percent to $7.08 billion in March from a year-ago level of $5.95 billion and was by 1.6 percent higher than the end-February level of $6.97 billion.

De Zuniga explained that the foreign exchange inflows as of end-March were partially offset by payments for maturing foreign exchange obligations of the National Government.

Last year, the reserves surged 41 percent to a record $62.37 billion from 44.24 billion in 2009. This year, the BSP sees the GIR hitting a new record level of between $68 billion and $70 billion.

The BSP also sees the country’s balance of payments (BOP) posting a surplus of about $6 billion to $8 billion this year from a record $14.4 billion in 2009 on the back of strong overseas Filipino workers’ remittances, high earnings of the business process outsourcing (BPO) sector, sustained export growth as well as surging capital flows.