The so-called foreign-currency operations of the Bangko Sentral ng Pilipinas (BSP), essentially when the Central Bank itself plays the foreign-exchange market to manage the exchange rate, helped diminished the country’s dollar reserves in June by some $700 million.
The BSP reported a diminution of the country’s gross international reserves (GIR) of only $81.41 billion in the first six months of this year. This proves lower compared to foreign-currency levels reported the previous May and that of last year.
Compared to the previous month, the June GIR level was $764 million lower than the $82.18 billion reported in May. Compared to the year ago level, this was $3.87 billion weaker than the $85.28 billion worth of foreign-currency reserves in the same month last year.
Despite the decline, the BSP said the end-June GIR should be enough to cover 8.7 months’ worth of imports of goods and payments of services and primary income.
It was also equivalent to 5.6 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.
Apart from outflows arising from the BSP’s foreign exchange operations, the BSP attributed the decline in the GIR to pay downs on maturing obligations of the national government and the retreat in the price of the central bank’s gold holdings forcing so-called revaluation adjustments.
In June the peso pushed past the 50-per-dollar territory due to the strong dollar.
BSP chief Nestor A. Espenilla Jr. recently gave assurance the central bank is “actively managing” volatilities in the foreign-exchange market as the exchange rate continues to go deeper into the P50 territory at last week’s trades.
The Central Bank endeavors to keep a market-determined foreign exchange framework, which essentially means the BSP allowing players to dictate the value of the peso even as it “maintains a strategic presence in the foreign-exchange market” to ensure against sharp rises and falls in the exchange rate.
The peso ended last Friday’s trade at 50.58 per dollar, slightly better compared to 50.67 per dollar in Thursday’s trade, data from the PDS Group showed.
The BSP said the national government payments made for maturing foreign-exchange debts, as well as revaluation adjustments on its gold holdings helped bring down the
level of GIR during the period. The decline could have been larger were it not partially offset by the foreign-currency deposits also by the national government and income from the BSP’s investments abroad.
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