THE COUNTRY’S foreign exchange buffers reached a new all-time high as of end-November, according to the Bangko Sentral ng Pilipinas (BSP).
The gross international reserves (GIR) stood at $104.51 billion as of end-November, increasing by 21.2% from its $86.227-billion level a year ago and up 0.68% from end-October’s $103.802-billion dollar stash.
This is the third consecutive month that the GIR level is beyond the $100-billion projection by the central bank.
The BSP said the month-on-month uptick in the dollar buffers got a boost from inflows from its foreign exchange operations and income from overseas investments.
On the other hand, foreign currency withdrawals during the month meant for debt obligations and revaluation losses from the gold stash were offsetting factors to the GIR buildup.
“The latest GIR level represents an adequate external liquidity buffer, which can help cushion the domestic economy against external shocks. This buffer is equivalent to 11.2 months’ worth of imports of goods and payments of services and primary income,” the BSP said in a statement.
At its end-November level, the GIR is also about 9.3 times the country’s short-term external debt based on original maturity and 5.3 times based on residual maturity.
Sufficient buffers cushion financial markets from volatility and assure foreign investors and debt watchers of the government’s capacity for debt payments despite the crisis.
The continued rise in the GIR also reflects the narrower trade deficit trend due to the slow recovery in imports, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.
Latest data from the Philippine Statistics Authority showed imports continued to shrink for the 18th consecutive month by 19.5% to $7.979 billion. Trade deficit in October was at $1.777 billion, narrower than the $1.783 billion in September 2020 and $3.573 billion in October 2019.
Broken down, reserves in the form of gold stood at $10.747 billion as of end-November, increasing by more than a third (34%) against its $8.015-billion standing a year ago.
Gains from foreign investments, which make up the bulk of the GIR, climbed 21.5% to $89.063 billion from $73.295 billion in November 2019.
On the other hand, foreign currency deposits decreased 15.7% to $2.681 billion from $3.18 billion.
Meanwhile, the country’s reserve position with the International Monetary Fund surged 44.1% to $809 million from $561.8 million. — Luz Wendy T. Noble