GIR to reach a record $83B by year’s end, says gov’t
By Michelle V. Remo
Philippine Daily Inquirer
10:54 pm | Tuesday, December 4th, 2012
The country’s foreign exchange reserves are set to scale new heights this year and the next, as the Bangko Sentral ng Pilipinas expects the figure to hit $83 billion by the close of December, and $86 billion by end 2013.
The BSP said dollar inflows would stay robust amid continuing improvements in the Philippines’ macroeconomic fundamentals.
“We expect a higher surplus in the balance of payments this year, the effect of which may be carried over to 2013,” BSP Governor Amando Tetangco Jr. told reporters Tuesday.
The BSP earlier reported that gross international reserves (GIR) amounted to $82.1 billion at the end of October. That amount would be enough to cover nearly a year’s worth of the country’s imports, and 6.6 times the total outstanding debt owed by the government and private sectors to foreign creditors, the regulator said.
Remittances from Filipinos working abroad continued to be the prime factor that fueled the rise of the country’s foreign exchange reserves. Other factors were foreign portfolio investments, foreign investments in business outsourcing industry, and tourism receipts.
In the first nine months of the year, remittances reached $15.57 billion—up 5.5 percent from the $14.76 billion reported in the same period last year.
Also, foreign portfolio investments to the Philippines are expected to remain significant over the medium term due to the positive outlook on the domestic economy.
According to government economic officials, the inflow of foreign “hot money” can be attributed to the government’s improved fiscal position, healthy pace of economic growth, a stable banking system, and prospects for an upgrade in the country’s credit rating by 2013.
Officials expect the Philippines to attain an investment grade next year following positive ratings actions over the past two years.
Now, all three major international credit agencies rate the Philippines just a notch below investment grade.
In the first 10 months of the year, the Philippines registered a net inflow of foreign portfolio investments at $2.66 billion.
Significant greenback flows into the country allowed the BSP to buy dollars from the market, which beefed up the country’s reserve of foreign exchange.
The BSP buys dollars from time to time to help temper the appreciation of the peso. Currency traders said the peso, which yesterday closed at its highest level in over four years, could have been stronger if not for the BSP’s market intervention.
The peso now hovers in the 40-to-a-dollar territory. At the start of this year, it stood at around 43:$1.
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Tags: Business , dollar inflows , Foreign exchange reserves
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