BSP raises intl reserves forecast to $50 billion

Monetary authorities Wednesday raised the forecast on gross international reserves this year as foreign exchange holdings of the central bank posted a record $48.42 billion on June 30, boosted by income from its operations, investments abroad, and gold holdings. In an interview with reporters on the sidelines of the 2010 Bangko Sentral ng Pilipinas Stakeholders' Awards, Gov. Amando Tetangco Jr. said authorities now see the GIR ranging between $49 billion and $50 billion from the revised forecast of $48 billion to $49 billion. The GIR last month was $738 million more than the May 31 level of $47.68 billion and $8.83 billion more than the $39.589 billion registered in June last year, Tetangco said. Foreign exchange inflows, particularly remittances from overseas Filipinos and the business process outsourcing companies supported the strong foreign portfolio investments and recovering export earnings of the country, Tetangco explained. "The increase in the end-June 2010 reserves was due mainly to foreign exchange inflows arising from the foreign exchange operations of the BSP and income from its investments abroad, foreign currency deposits from authorized agent banks, and revaluation gains on the BSP's gold holdings on account of the increase in gold prices in the international market," Tetangco said. "Earlier this year we were also benefited by the foreign loans that were secured by the national government. Part of this has become part of the reserves, and the other was used by the national government," the BSP chief said. The central bank's foreign investments went up by $5.9 billion to $39.84 billion in June from $33.94 billion in the same month last year, BSP data showed. Its income from foreign exchange operations plunged by $172.69 million to $521.23 million from $693.92 million, however. Its gold holdings surged by $2.148 billion to $6.859 billion from $4.711 billion year-on–year, and its special drawing rights from the International Monetary Fund increased to $1.073 billion from $10.35 million. Payments made on maturing loans of the national government and the central bank partly offset the foreign exchange inflows, Tetangco said. At $48.42 billion, the GIR - the sum of all foreign exchange flowing into the country - could cover nine months of imports of goods and services payments, as well as 9.3 times the country's short-term external debt based on original maturity. This quarter, the Monetary Board intends to review the 8 percent growth forecast in remittances, Tetangco said. "We are sticking to that forecast for now, we are going to review the forecast maybe in the later part of the third quarter and we will have to see whether that 8 percent is still doable," he said. —VS, GMANews.TV