The country’s gross international reserves climbed to a six-month high of $99.72 billion in January from $96.1 billion in December 2022 on higher value of the Bangko Sentral ng Pilipinas’ gold holdings and proceeds from the global bond issuance of the government.
Data showed it was the highest GIR level since it reached $99.83 billion in July 2022.
The BSP said in a statement Wednesday the January GIR represented a more than adequate external liquidity buffer equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income. It was also about 6.0 times the country’s short-term external debt based on original maturity and 4.0 times based on residual maturity.
“The month-on-month increase in the GIR level reflected mainly the national government’s net foreign currency deposits with the BSP, which include proceeds from its issuance of ROP global bonds, the upward valuation adjustments in the value of the BSP’s gold holdings due to the increase in the price of gold in the international market and net income from the BSP’s investments abroad,” it said.
Net international reserves, which refer to the difference between the BSP’s reserve assets and reserve liabilities, also went up by $3.6 billion to $99.7 billion as of end-January from $96.1 billion in the previous month.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said the GIR could have picked up further after the seasonal increase in remittances, especially in view of increased holiday-related spending in December and as growth continued into the New Year.
Other factors that increased the reserves level, aside from OFW remittances, were business process outsourcing revenues, near record-high exports in recent months that led to the recent narrowing of the trade deficit and notable continued recovery in foreign tourism revenues that were almost not present in the past two years, he said.
“For the coming months, the country’s GIR could still be supported by the continued growth in the country’s structural inflows from OFW remittances, BPO revenues, exports, relatively fast recovery in foreign tourism revenues [resumed since February 10, 2022, group tours from China which resumed since the latter part of January 2023 as well as continued foreign investment inflows,” Ricafort said.
Data showed that in 2022, the GIR declined by 11.8 percent, or $12.8 billion, to $96 billion from $108.8 billion in 2021 on weaker peso against the US dollar in most part of the year.
The peso depreciated by 9.3 percent against the greenback in 2022, pulled down by global uncertainties that impacted financial markets, including the aggressive moves of the US Federal Reserve in raising interest rates that boosted the dollar compared to other currencies.
The GIR posted a record high of $110.1 billion in December 2020 at the height of the pandemic.
