MANILA – Another record-high foreign reserves is projected for the Philippines in the coming months as structural inflows remain resilient and quarantine measures support the improvement in the trade deficit.
Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) on Friday showed that gross international reserves (GIR) reached USD107.25 billion as of end-April 2021, up from the previous month’s USD04.48 billion and nearing the record high USD110.1 billion last December.
“Thus, new record high GIR (is) possible in the coming months amid narrower trade deficit/net imports; continued inflows of OFW (overseas Filipino workers) remittances, BPO (business process outsourcing) revenues, FDIs (foreign direct investments),” Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort, said in a report,
BSP said the latest GIR level “represents a more than adequate external liquidity buffer, which can help cushion the domestic economy against external shocks.”
It said this level is equivalent to 12.3 months’ worth of imports of goods and payments of services and primary income and accounts for about 7.5 times the country’s short-term external debt based on original maturity.
It attributed the rise in the GIR to the proceeds of the national government’s US dollar-denominated global bond and Samurai bond issuances that have been deposited with the central bank.
Aside from these factors, Ricafort said, “narrower trade deficit/net imports largely brought about by the tighter quarantine standards in NCR Plus since the latter part of March 2021 would have also added to the country's BOP (balance of payment) and GIR.”
He said the current foreign reserves level of the country is way higher than the minimum international threshold of 3-4 months and “thereby would help strengthen the country’s external position and, in turn, fundamentally supports/favorable to the country’s credit ratings.”
He added that the “near-record high GIR levels would fundamentally provide greater cushion/buffer/support for the peso exchange rate, thereby leading to the stronger peso exchange rate, recently among the strongest in more than 4.5 years or since September 2016, or at least gives greater protection to the peso vs. speculative attacks, going forward.” (PNA)
