April dollar reserves hit new high

08May09

THE country’s dollar reserves hit a fresh record last month, mainly driven by inflows from investments abroad and remittances, the Bangko Sentral ng Pilipinas (BSP) said.

In a statement, the BSP said the country’s gross international reserves (GIR) reached $39.5 billion at end-April this year, or $424 million from the $39 billion registered at end-March.

Last month’s GIR likewise was higher than the $36.355 billion registered in the same month last year.

Excluding short-term liabilities, the country’s net international reserves (NIR) likewise increased to $37.9 billion at end-April from $37.5 billion in March.

The BSP projected the GIR to reach $38.5 billion this year, higher than the $37.5 billion of last year.

A sustained reduction in the country’s dollar reserves weakens the peso’s dollar value, thus bidding up inflation.

BSP Governor Amando Tetangco Jr., said the increase in the April reserves level was due mainly to inflows from the central bank’s net foreign exchange operations, income from its investments abroad, as well as foreign currency deposits by authorized agent banks and by the national government.

“The current GIR level could cover 6.3 months of imports of goods and payments of services and income,” Tetangco said. It was also equivalent to 5.6 times the country’s short-term external debt based on original maturity and 3.0 times based on residual maturity, the latter including the current portion of long-term obligations.

The BSP had said remittances from overseas Filipinos increased in April in time for school enrollment in the current year.

It projected remittances to post flat growth this year from $16.4 billion last year.

Also, investments for business process outsourcing (BPO) services supported the increase of dollar inflows, the BSP said. The BPO industry is expected to sustain its growth due to the increasing need to outsource non-core business activities among companies in the advanced economies to cope with the global financial crisis.

The April inflows were offset by outflows arising from the repayment of maturing foreign exchange obligations of the national government at $120 million, as well as the valuation losses in the BSP’s gold holdings, which amounted to $4.422 billion last month, down from $4.547 billion previously due to the lower price of the precious commodity in the international market.