Foreign exchange reserves drop slightly in March to $76.5B

By Lawrence Agcaoili, The Philippine Star

Posted at Apr 05 2012 10:01 AM | Updated as of Apr 05 2012 06:01 PM

MANILA, Philippines - The country’s foreign exchange reserves dropped slightly in March due primarily to the payment of the government’s maturing foreign obligations and lower earnings from the central bank’s foreign investments, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

In a statement, BSP Governor Amando Tetangco Jr. announced Wednesday that the country’s gross international reserves (GIR) reached $76.539 billion in March or $472 million lower than the $77.011 billion booked in February.

The GIR – the sum of all foreign exchange flowing into the country – hit a record level of $77.357 billion in January.

“The decline in the reserves level was due mainly to payments for maturing foreign exchange obligations of the national government, foreign currency withdrawals by authorized agent banks, and revaluation losses on the BSP’s gold holdings,” Tetangco stressed.

However, data showed that earnings from the central bank’s foreign investments retreated by 3.1 percent to $63.971 billion in March from $65.992 billion in February while its gold holdings jumped 17.5 percent to $10.443 billion from $8.888 billion.

Compared to March last year, data showed that the country’s GIR increased by 16 percent from $65.893 billion.

On the other hand, Tetangco said the inflows were partially offset by outlows consisting of payments of maturing foreign exchange obligations by the national government and the central bank.

The strong external payments position gives the country enough buffer to survive external shocks arising from the economic uncertainties in advanced economies led by the US as well as the sovereign debt crisis in Europe.

“Notwithstanding the slightly lower GIR level, reserves continued to provide the economy with a comfortable buffer with which to withstand possible external shocks,” the BSP chief said.

Tetangco said the end-March GIR level could cover 11.5 months worth of imports of goods and payments of services and income as well as 10.9 times the country’s short-term external debt based on original maturity and 6.5 times based on residual maturity.

 The BSP sees the country’s GIR hitting a record level of $79 billion this year. The end-2011 GIR reached $75.302 billion and was lower than the revised full-year target of $76 billion.