The gross international reserves of the Philippines climbed to a six-month high of $101.1 billion in October from $98.1 billion in September, the Bangko Sentral ng Pilipinas said Wednesday.
It was the highest level of the GIR, which serves as the country’s buffer against external financial volatilities, since it reached $101.6 billion in April 2023. It was also higher than $94 billion registered a year ago.
“The month-on-month increase in the GIR level reflected mainly the national government’s net foreign currency deposits with the Bangko Sentral ng Pilipinas, which include proceeds from its issuance of Retail Onshore Dollar Bonds 2 [RDB 2],” the BSP said in a statement.
The government raised $1.26 billion from the issuance of the RDB 2 amid strong demand last month. The RDB 2 has a tenor of 5.5 years and a gross interest rate of 5.750 percent per annum, payable every quarter until its maturity in 2029.
The BSP said other factors that contributed to the GIR’s increase in October were the upward valuation adjustments in the BSP’s gold holdings on increased prices of the metal in the international market and the BSP’s net foreign exchange operations and net income from its investments abroad, it said.
The BSP’s gold holdings climbed to $10.57 billion in October from $9.79 billion in September and $8.27 billion a year ago.
“The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income,” the BSP said.
It was also about 5.9 times the country’s short-term external debt based on original maturity and 3.7 times based on residual maturity.
The net international reserves, or the difference between the BSP’s reserve assets and reserve liabilities (short-term foreign debt and credit and loans from the International Monetary Fund), increased $2.3 billion to $100.4 billion as of end-October from $98.1 billion a month earlier.
Foreign exchange reserves help stabilize the value of the local currency. The peso closed stronger at 56.045 against the US dollar Wednesday from 56.11 Tuesday.
Sumitomo Mitsui Banking Corp. (SMBC) head of macro strategy for Asia Jeff Ng said he was expecting the peso-dollar exchange rate to be somewhat more stable over the coming 12 months.
He said the local currency was expected to remain below 57.00 in the near-term, moving lower to 55.75 by end-2024.
The hawkish stance of the BSP’s Monetary Board has recently supported the value of the peso. “BSP may maintain a neutral-to-hawkish stance in its ‘live’ meeting on 16 November. This comes after an off-cycle benchmark rate hike [by 25bps to 6.50 percent] on 26 October. BSP saw it necessary to keep policy settings tighter for longer and is prepared for follow-through policy action. However, a weaker-than-expected CPI print may reduce the likelihood of more tightening in the near-term,” Ng said.
