MANILA, Philippines – The country should see sustained growth in its gross international reserves (GIR) as global financial markets experience less volatility, the research arm of Metropolitan Bank & Trust Co. said.
“As the dust settles in the global financial markets, the rise in the country’s GIR levels in the coming months is seen to be sustained,” Pauline Revillas, research analyst at Metrobank, said in a recent report.
“The BSP is in fact forecasting its GIR to grow by almost six percent this year from the end-2013 level of $83.2 billion,” she noted.
GIR went up to $80.343 billion in February after falling to a 19-month low in January.
The Bangko Sentral ng Pilipinas (BSP) attributed the rise in reserves to revaluation adjustments of gold and income from the central bank’s foreign exchange operations and investments abroad.
“The volatility in the global financial markets was a factor in the rise of the February level,” Revillas said.
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“For one, the market’s risk aversion, on the back of sluggish US and Chinese economic growths, fueled a rise in the demand for commodities like gold. Thus, the value of gold in the international market rose in recent months,” she added.
Revillas further said: “Furthermore, in February, the peso managed to regain its ground and remained stable within the 44-level amid the pressure on the US dollar.”
The GIR indicates a country’s ability to pay for its foreign debt and imports of goods and services. The February GIR is enough to cover 11.5 months’ worth of imports of goods and payments of services and income.
It is also equivalent to 7.9 times the country’s short-term external debt based on original maturity and 5.7 times based on residual maturity.
“By convention, GIR is deemed adequate if it can pay for three months of imports and can pay for all public and private foreign debts falling due within the year,” Revillas noted.
The central bank has an $88-billion assumption for GIR this year.
However, BSP Governor Amando M. Tetangco, Jr. earlier said the actual level may only amount to between $86 billion and $87 billion due to revaluation adjustments.
