The Bangko Sentral ng Pilipinas’ (BSP) foreign-exchange (forex) operations and income from its investments abroad raised the country’s gross international reserves (GIR) to another all-time high of $104.51 billion as of end-November.
Preliminary central bank data showed on Tuesday that the amount was a 0.68-percent and 21.20-percent increase from those posted a month and a year ago, respectively.
The figure also breached the previous record-high level of $103.80 billion in October, but remains below the BSP’s revised official $105-billion estimate for this year.
In a statement, the Bangko Sentral said the month-on-month expansion reflected inflows mainly from its forex operations and income from overseas investments.
“These inflows were partly offset, however, by the foreign-currency withdrawals the national government made to pay its foreign currency debt obligations and revaluation losses from the BSP’s gold holdings [that resulted] from the decrease in the price of gold in the international market,” it added.
The latest level represents a more-than-adequate external liquidity buffer that can cushion the country’s economy from external shocks.
It is also enough to cover 11.2 months worth of imports, larger than October’s 11.1 months and November 2019’s 7.5 percent; 9.3 times the country’s short-term external debt based on original maturity; and 5.3 times based on residual maturity.
Net international reserves, which refer to the difference between GIR and total short-term liabilities, also picked up to $104.49 billion in the 11th month from $103.79 billion a month earlier.
In a comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the latest GIR level could provide greater support for the peso’s exchange rate against the US dollar.
“For the coming months, GIR could still post new record highs in view of the sustained gains of the catalysts/factors mentioned above as the economy reopens and recovers further, as improved by the further developments and [the] deployment [or] rollout of the various vaccines for Covid-19 (coronavirus disease 2019),” he added.
The economist also said more foreign borrowings and other fundraising activities by the government, especially for various Covid-19 pandemic-related programs, and private-sector investments could also support a surge in the country’s dollar reserves.
Next year, the Bangko Sentral expects these reserves to balloon to $106 billion, equivalent to 10.9 months of import cover, with the support coming from current and financial account inflows.
BSP Governor Benjamin Diokno has said the GIR level would depend on many factors, one of which was local purchases of gold.
“If domestic gold purchases go up significantly…if the price of gold in the international market continues to be at current levels, then this [would] gradually increase the GIR,” he said.
The price of gold is now around $2,000 per ounce from the previous $1,400, he added.
To take advantage of rising gold prices, the central bank chief also said monetary authorities had decided to actively trade some of the country’s gold reserves.
Twelve percent of the country’s GIR are in gold, he added.