BSP Governor Felipe Medalla said preliminary data showed global reserves (GIR) settled to $101.51 billion in April from $101.55 billion in March.
MANILA, Philippines — The country’s foreign exchange buffer is at levels above $100 billion, despite a slight dip in April as the central government paid off maturing external debt, according to the Bank of the Philippines (BSP) stayed in
BSP Governor Felipe Medalla said preliminary data showed global reserves (GIR) settled to $101.51 billion in April from $101.55 billion in March.
“The decline in the GIR level in April mainly reflected the payment of foreign currency debt by the central government,” Medalla said in a statement.
After dipping below $100 billion to reach $98.22 billion in February, central banks managed to build buffers above $100 billion in March and April.
The GIR is the sum of all foreign currency flowing into a country and acts as a reserve to ensure that there is no shortage of foreign currency available in case of external shocks.
Despite the slight decline in April, Medalla noted that GIR levels represent ample external buffers.
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According to Medalla, the GIR is equivalent to 7.6 months worth of imports of goods, payments for services and primary income. It is also approximately 5.9 times the country’s short-term external debt based on original maturities and 4.1 times based on remaining maturities.
A GIR is considered adequate if it can finance at least three months worth of imports of goods, services and primary income payments. It is also considered adequate if it provides at least 100% coverage for the payments of the country’s public and private external debts that are due within the immediately preceding 12-month period.
The latest data show central bank gold holdings rose 1.6% to $10.24 billion in April, while foreign investment remained little changed from $85.4 billion to $85.52 billion. bottom.
The BSP has aggressively intervened in the foreign exchange market to soak up buffers to help the peso rise from an all-time low of 59 to $1 last October to 53.68 to $1 on February 3. .
Aggressive rate hikes by the BSP and aggressive intervention in the foreign exchange market led the peso to end 2022 at $155.755, down 9.3% from $150.999 at the end of 2021.
Expected further interest rate hikes by the US Federal Reserve have pushed the local currency down again, breaking above $56 to $1 last month.
After hitting an all-time high of $110.12 billion in 2020, the buffer is steadily declining to $108.79 billion in 2021 and $96.15 billion in 2022.
After surpassing last year’s target of $93 billion, the BSP’s Monetary Committee now expects the GIR level to settle at $100 billion this year and $102 billion next year.
