Philippines forex reserves jump

The country’s foreign exchange reserves jumped 40 percent to register same period in 2010. An ample GIR level helps prop up the peso and keeps domestic inflation at bay.

Deputy Governor Juan de Zuniga, officer in charge, attributed the year-on-year buildup in the reserves level to the receipts from foreign exchange operations and income from investments abroad of the central bank, as well as revaluation gains on its gold holdings arising from the sustained increase in gold prices in the international market. These inflows were partly offset by payments for maturing foreign exchange obligations of the national government.

De Zuniga said the February reserves rose to a level that could cover 10.5-months worth of imports of goods and payments of services and income.

The latest GIR level was also equivalent to 11.1 times the country’s short-term external debt based on original maturity and 6.1 times based on residual maturity.

Net international reserves, which is the difference between the GIR and the country’s short-term liabilities, stood at $63.9 billion, slightly higher than the $63.5 billion at end-January. Gold holdings of the BSP inched up 25 percent to reach $6.97 billion in the first two months from $5.57 billion the year before.

Foreign investments surged 42.76 percent to $55.14 billion from $38.62 billion in the same two-month period in 2010, while receipts from foreign exchange operations moved up 8.87 percent to $333.64 million from $306.43 million last year.

Monetary authorities expect the country’s GIR to hit $68 billion to $70 billion this year from $62.3 billion in 2010.