Metrobank research unit sees adequate GIR level to support peso

MANILA, Philippines - The country’s international reserves remain adequate as a buffer against external shocks and continues to provide support to the peso, the research arm of Metropolitan Bank & Trust Co. said.

“Despite the modest movement in the reserves for 2013, current GIR (gross international reserves) levels remain healthy – still enough to shield the economy from negative externalities that might happen this year,” Metrobank Research said in its Weekly Views from the Metro report.

Gross international reserves, which summed up to $83.7 billion in end-2013, indicates a country’s ability to service foreign debt and pay for imports.

Although slightly below the $83.831 billion recorded in 2012, last year’s GIR is enough to cover 12 months’ worth of imports of goods and payments of services and income.

At the same time, it is also equal to 8.4 times the country’s short-term debt based on original maturity and 5.8 times based on residual maturity.

“Indeed, the country’s international liquidity position remains favorable and should continue to support the peso,” Metrobank Research said.

The peso earlier in the week fell to a more than three-year low on the back of favorable US economic data that propped up the dollar.

The local unit closed at P45.12 to a dollar, its weakest level since Aug. 26, 2010, when it finished at P45.13:$1.

Metrobank Research noted it sees the peso finishing at P43 per dollar by yearend.

The 2013 GIR level was below the Bangko Sentral ng Pilipinas’ assumption of $85 billion. However, BSP Governor Amando M. Tetangco, Jr. earlier said reserves may settle between $83 billion to $84 billion due to revaluation adjustments in both the gold prices and the currency.