The country’s gross international reserves at the end of August hit $108.5 billion, equivalent to 12.3 months’ worth of imports of goods and payments of services and primary income. It is also 7.8 times the country’s short-term external debt based on original maturity and 5.4 times based on residual maturity.
The country’s gross international reserves, or holdings of foreign exchange monies being managed by the Bangko Sentral, hit $108.5 billion in August, or by $900 million more compared to July and $9 billion more for the same month last year.
The GIR is important for the economy to be able to absorb the shocks of foreign currency adjustments abroad since most of its imports and foreign loans carry foreign denominations.
BSP Governor Benjamin Diokno attributed the increase in the country’s GIR to the additional allocation of Special Drawing Rights (SDR) to the Philippines given the International Monetary Fund’s efforts to increase global liquidity amid the pandemic.
“It could have been higher but was partially offset by the national government’s (NG) foreign currency withdrawals from its deposits with the BSP as the NG settled its foreign currency debt obligations and paid for various expenditures, and the BSP’s net foreign exchange operations,” he explained.
At this level, the BSP said the GIR represents a “more than adequate external liquidity buffer” for the country, as it is equivalent to 12.3 months’ worth of imports of goods and payments of services and primary income.
It is also about 7.8 times the country’s short-term external debt based on original maturity and 5.4 times based on residual maturity.
International analysts have lauded the country’s ability to shore up its dollar defenses during the pandemic.
In its recent affirmation of the country’s credit rating, Japan Credit Rating Agency said the strong GIR of the country “demonstrate the robustness of the country’s foreign currency liquidity position.”
Recently, Fitch Solutions also said the country’s substantial GIR level is expected to limit the country’s risks from running a current-account deficit through the medium term, the Business Mirror reported.
Tags: #economy, #BangkoSentralNgPilipinas, #grossinternationalreserves, #foreignexchange