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Gross international reserves soared to $103.8B in October

The country’s gross international reserves soared to a record $103.8 billion as of end-October, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Friday.

Diokno said in a message to reporters the October level was higher than the end-September figure of $100.443 billion.

Higher prices of gold in the international market helped push the GIR this year. The BSP had gold holdings of $11.650 billion in October, up from $11.594 billion in September.

Diokno said in a previous briefing an increase in gold prices would also boost the reserves, which serve as the country’s buffer against external volatilities. Gold holdings account for around 12.8 percent of the country’s reserves.

Diokno said the BSP would actively engage in gold trading to seize the opportunity presented by the increasing price of the precious metal in the global market.

He said the shift to active gold trading—from passive trading previously done before he became BSP governor—would be good to managing the international reserves.

Diokno noted that the price of gold surged from around $1.400/FTO (fine troy ounce) in the previous year to about $2.000/FTO this year.

The BSP’s gold purchases from small miners became more attractive under its gold buying program. The bank purchases refined gold in Philippine peso at the prevailing international gold buying price and prevailing foreign exchange rate set by the BSP Treasury Department on a daily basis.

Data showed that from $3.2 billion in 1980, the Philippines’ GIR rose steadily over the last 40 years, but it was only in September this year that it breached the $100-million mark.

Aside from gold holdings, the GIR consisted of BSP’s foreign investments, foreign exchange, special drawing rights and reserve position in the International Monetary Fund.

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

Diokono said earlier that the GIR represented more than adequate external liquidity buffer to cushion the domestic economy against external shocks.

It was equivalent to 10 months’ worth of imports of goods and payments of services and primary income and was more than 9 times the country’s short-term external debt.

The GIR also keeps the value of the peso stable as it ensures the market that the BSP has enough reserves to tame significant fluctuations in foreign exchange.

The peso gained more than 4 percent against the US dollar since the start of the year to close at 48.21 to the dollar on Friday.

Topics: Benjamin Diokno , gross international reserves , International Monetary Fund , Bangko Sentral ng Pilipinas
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