RP dollar reserves rise due to higher gold prices

MANILA, Philippines - The Philippines’ dollar reserves climbed to a new record after Manila borrowed more money from abroad and the price of gold increased. As of end-May this year, the country’s gross international reserves (GIR) reached $39.319 billion, preliminary estimates made by the Bangko Sentral ng Pilipinas (BSP) indicated. Although the amount is $3 million higher than April’s turnout, the figure remains lower than the $39.5 billion as earlier forecast by the BSP. The optimistic projection was based on expectations that portfolio investments – also known as foreign funds buying into local stocks and bonds – and foreign exchange inflows would go up. “Foreign exchange inflows were strong in May, especially if you look at portfolio investments," BSP Governor Amando M. Tetangco Jr. said. “There was one week when inflows amounted to around $500 million." Higher portfolio investments have been climbing, an indication that investors’ risk appetites have increased after having avoided emerging markets ever since the global crisis erupted. At current levels, the Philippines’ foreign exchange reserves can pay for 6.3 months of imported goods as well as payment for services and income, BSP Governor Amando M. Tetangco Jr. said. Dollar reserves can also cover six times the country’s short-term foreign debt based on original maturity and 3.1 times based on residual maturity. Increased foreign reserves also resulted from dollar inflows as well as revaluation of the BSP’s holdings of gold, whose price rose in the international market during the month. Reserves were also boosted by the national government’s foreign currency deposits as well as income earned from the BSP’s foreign investments and foreign exchange operations. Moreover, the country’s net international reserves – the remaining dollar amount after short-term liabilities are subtracted from the total amount of foreign exchange – rose to $38.3 billion as of end-May. The figure, which includes reserve asset revaluation and reserve-related liabilities, is higher than the previous month, the result of the BSP’s partial settlement of credits extended by foreign financial counterparts. Full year reserves are expected to reach $38.5 billion this year, with balance of payments – exports minus imports, including financial flows –hitting $700 million. - GMANews.TV