Philippines' Gross International Reserves Reached $109.8 Billion US Dollars

Philippines Gross International Reserves Reached $109.8 Billion US Dollars

Gross International reserves of the Philippines graph from 2000 - 2020

The Philippines’ foreign currency reserves have continued to build up and hit a new all-time high as of end-December 2020, the Bangko Sentral ng Pilipinas (BSP) said. The built up the country’s foreign exchange reserves to a record $109.8 billion in 2020 in a bid to soften the impact of the coronavirus pandemic on the economy.

Data released by the BSP showed the country’s gross international reserves (GIR) level stood at $109.8 billion, higher by $4.98 billion from end-November 2020 level of $104.82 billion.

Preliminary data released by the central bank showed the gross international reserves (GIR) rose 25 percent last year from $87.84 billion booked in end-2019.

The end-December GIR was also 4.7 percent higher than the end-November level of $104.81 billion.

“The latest GIR level represents an adequate external liquidity buffer, which can help cushion the domestic economy against external shocks,” the BSP said.

The central bank said the month-on-month increase in the GIR reflected inflows mainly from the BSP’s foreign exchange operations and national government’s foreign currency deposits with the BSP of proceeds from its issuance of global bonds.

“The month-on-month increase in the GIR level reflected inflows mainly from the BSP’s foreign exchange operations, National Government’s (NG) foreign currency deposits with the BSP of proceeds from its issuance of ROP Global Bonds, and revaluation gains from the BSP’s gold holdings due to the increase in the price of gold in the international market,” The end-December 2020 foreign reserves level represents an “adequate external liquidity buffer,” as such level can help cushion the domestic economy against external shocks, the central bank said.

 Such a liquidity buffer is equivalent to 11.7 months’ worth of imports of goods and payments of services and primary income, according to the central bank.

“It is also about 9.6 times the country’s short-term external debt based on original maturity and 5.5 times based on residual maturity,” the BSP said.

Similarly, the net international reserves (NIR), which refers to the difference between the BSP’s GIR and total short-term liabilities, increased by $5 billion to $109.8 billion as of end-December 2020 from the end-November 2020 level of $104.8 billion.

The Philippines returned to the offshore debt market, raising $2.75 billion from the sale of dollar- denominated funds to boost the government’s war chest against the impact of the COVID-19 pandemic.

This followed the $2.35 billion dual tranche global bond offering in May as well as the 1.2-billion euro bond offering in January.

The BSP also traced the increase in the country’s foreign exchange buffer to the revaluation gains from its gold holdings due to the increase in the price of gold in the international market.

The value of the central bank’s gold holdings surged 44.8 percent to $11.6 billion in end-2020 from $8.01 billion in end-2019.

The BSP’s Monetary Board decided to shift to active gold trading instead of being passive because of the change in the price dynamics of gold. The price of gold topped $2,000 an ounce to reach new record levels but has since corrected to $1,860 an ounce.

According to the BSP, the inflows last year were partly offset by the payments by the national government of its foreign currency debt obligations.

The GIR is the sum of all foreign exchange flowing into the country and serves as buffer to ensure that it will not run out of foreign exchange that it could use in case of external shocks.

According to the BSP, the buffer is equivalent to 11.7 months’ worth of imports of goods and payments of services and primary income as well as also about 9.6 times the country’s short-term external debt based on original maturity and 5.5 times based on residual maturity.

Like most central banks, it holds international reserves to provide a standby supply of foreign exchange for instances when foreign exchange holdings of domestic commercial banks temporarily fall short of the total demand from the private sector and the national government.

The BSP said the more than 11 months’ worth of import cover is way above the perceived doctrine of only three months’ worth of imports.

For his part, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the GIR could still post new record highs in the coming months in view of the sustained gains as the economy reopens further, and the start of the roll out of COVID-19 vaccines.

“GIR could also post new record highs in view of more proceeds of foreign borrowings and other fund-raising activities by the government especially for various COVID-19 programs, including for COVID-19 vaccine purchases, and by the private sector that entail foreign investors in the coming months amid near record low interest rates/financing costs that make borrowings more attractive.

Share on Google Plus

About Makisig Bayani

I am among of the head writers and administrators of this repository news web site. I always on the heads up when it comes to Sports, Politics, Economy, Business, Physics, Mathematics, Technology, computers and NEWS all over the world that triggers ny eyes and interests. I am working as a volunteer with other 14 administrators, researchers, writers and contributors. We are a strong solid team. Join us and be among of the contributor with your name on each posted article.

    Anonymous or Google Comment
    Facebook Comment

YOU MAY LIKE TO READ

LEARN FOREX TRADING AND GET RICH

Investment Recommendation: Bitcoin Investments

Live trading with Bitcoin through IQ Options Trading platform would allow you to grow your $100 to $1,000 Dollars or more in just a day. Just learn how to trade and enjoy the windfall of profits. Take note, Bitcoin is more expensive than Gold now.


Where to buy Bitcoins?

For Philippine customers: You could buy Bitcoin Online at Coins.ph
For outside the Philippines customers  may buy Bitcoins online at Coinbase.com