BSP: End-July forex reserves 45% wider

The Philippines’ foreign exchange reserves jumped close to 45 percent as of end-July from a year earlier due to strong earnings from investments abroad among other income streams, the Bangko Sentral ng Pilipinas (BSP) reported Friday. In a statement, BSP governor Amando Tetangco Jr. said the gross international reserves (GIR) breached the BSP’s revised $70-billion target after hitting a new record $70.997 billion as of end-July. This was higher by $21.948 billion from $49.049-billion year-on-year. “The appreciable build-up in the reserve level was due mainly to the foreign exchange operations and income from investments abroad of the BSP as well as revaluation gains on the BSP's gold holdings on account of the increase in gold prices in the international market in July 2011," Tetangco explained. The GIR refers to the sum of all foreign exchange flowing into the country. Earnings from investments abroad BSP data show that the bank’s income from investments abroad surged 50.3 percent, to $61.332 billion as of end-July from $40.792 billion in the same month in 2010. The BSP’s gold holdings also rose 15 percent to $7.678 billion from $6.676 billion, according to data. The BSP’s earnings from =foreign-exchange operations inched up by 9.7 percent, to $374.53 million from $341.42 million. July’s GIR level was $2 billion higher than the end-June level of $68.996 billion, Tetangco said. The BSP’s earnings from investments abroad also rose by 3.12 percent, to $61.32 billion from $59.478 billion month-on-month. On the other hand, its income from foreign-exchange operations rose by 3.3 percent, to $374.53 million from $362.51 million. Meanwhile, the central bank’s gold holdings rose to $7.678 billion from $7.616 billion. The inflows were partially offset by payments made by the national government for its maturing foreign-exchange obligations, Tetangco said. The BSP chief also said the end-July GIR level could cover 10.6 months of goods imports and payments of services and income, as well as 10.5 times the Philippines’ short-term external debt based on original maturity, and 6.1 times based on residual maturity. GIR, BOP projections The GIR will likely hit a new record level of $70 billion this year and $75 billion next year, the BSP earlier projected. The Philippines’ foreign-exchange reserves surged 41 percent to $62.37 billion last year – a record – from $44.24 billion in 2009. The BSP, on the other hand, sees the Philippines’ balance of payments (a surplus widening to $6.7 billion this year and $4.4 billion in 2012. The payments position is the difference of foreign-exchange inflows and outflows in a particular period, representing the Philippines’ transactions with the rest of the globe. — PE/VS, GMA News