MANILA - The country's foreign exchange reserves climbed to $80.8 billion in the first eight months of the year, well above the Bangko Sentral ng Pilipinas' full-year forecast of $78 billion.
In a statement, the BSP on Friday said the country's gross international reserves increased by $1 billion from the end-July level of $79.8 billion.
At the end-August level, the GIR can cover 11.9 months of imports of goods and payments of services and income.
Alternatively, the eight-month forex hoard allows the country to settle 10.9 times over its external debt based on original maturity, and 6.6 times its obligations based on residual maturity. Residual maturity includes portions of long-term debt that are due within a year.
The BSP ascribed the country's strong GIR position to income from the central bank's forex operations and investments abroad, foreign currency deposits of the national government and revaluation gains of gold holdings.
Excluding short-term liabilities, the country's net international reserves likewise increased $1 billion to $80.8 billion at end-August.
Ample forex reserves help prop up the peso and keep domestic inflation at bay. Inflation averaged 3.2 percent in the first seven months of the year, or at the low end of the BSP's full-year target range of 3-5 percent.
The peso meanwhile has scaled to four-year highs on the strength of strong foreign portfolio investments. Data from the BSP showed that net inflows of "hot money" at end-July rose by more than three-fold to $963 million from a year ago.
On Thursday, BSP Governor Amando Tetangco Jr. said the central bank was keeping tabs of domestic money supply growth, which rose 7.1 percent in June largely because of strong foreign capital inflows. Any expansion in domestic liquidity that is faster than demand tends to bid up inflation.
The BSP has brought its policy rates to record lows of 3.75 percent and 5.75 percent for the overnight borrowing and lending windows, respectively. Its policy-making Monetary Board is set to meet next week to decide on any further adjustment.
DBS earlier said it expects the BSP to cut policy rates by another 25 basis points before the end of the year given benign inflation and economic weakness brought about by the Euro zone debt crisis and the US economy's tentative recovery.
source: interaksyon.com
