RP forex reserves down to $35.7B
Des Ferriols
Philippine Star
The country’s foreign exchange reserves dropped to $35.7 billion in October due to the dramatic decline in gold prices as well as drawdown for debt payments.
Data from the Bangko Sentral ng Pilipinas (BSP) showed yesterday that the gross international reserves (GIR) fell below the $36-billion mark and was $1 billion lower than the September level of $36.7 billion.
The BSP said there was a downward revaluation of the BSP’s gold assets because of the decline in gold prices abroad. The central bank’s gold holdings went down to $3.516 billion in October from $3.848 billion in September.
The BSP said the government also used up foreign exchange to pay off maturing foreign exchange obligations of the National Government as well as the central bank.
The GIR level also reflected earlier foreign exchange withdrawals made by the Power Sector Assets and Liabilities Management Corp. (PSALM) which had foreign currency deposits with the BSP.
Despite the decline in GIR, the BSP said the current level was still able to cover about 5.6 months worth of imports as well as payments of services and income.
At this level, the BSP said the GIR is also equivalent to 3.6 times the country’s short-term external debt. This indicates that the country is still well able to pay off its outstanding obligations should all its creditors demand payment today.
Although thinning slightly, the October GIR level was still higher than last year’s October GIR level of $32.498 billion. In 2007, the GIR was recorded at $33.751 billion and it has been steadily increasing since then.
The highest GIR level recorded so far this year was in July when it hit $36.9 billion.
The BSP projected that the country’s GIR would reach $37 billion this year, expressing optimism that all things considered, the country’s balance of payments would still be at a surplus level.
Although reaching record highs this year, however, the BOP position has been under significant stress from the surges in oil prices that eroded the reserves.
The BSP said earlier the GIR would likely top $40 billion in 2009, at most $3 billion better than this year’s projected level of $36.5 billion to $37 billion, with the surge coming mainly from remittances from overseas Filipino workers (OFWs).
The gross international reserve is the sum of all foreign exchange flowing into the country from exports of merchandize, earnings from businesses abroad, foreign borrowings, investments and remittances.
The balance of payments (BOP) is the sum of the country’s transactions with the rest of the world paid out of the foreign exchange reserves. Last year, the country was in surplus position recorded at $8.6 billion but this year, officials expect only about $1.5 billion.
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