Oct. 23--THE Philippine central bank again raised its international reserves forecast after the country's dollar cache breached the full-year goal at end-September. Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said the country's gross international reserves (GIR) may reach between $54 billion and $55 billion this year, from an earlier forecast of between $49 billion and $50 billion. The revision came after BSP data showing the end-September GIR hitting $53.54 billion, surpassing the full-year projection by 7.08 percent. The BSP attributed the increase in the country's GIR to its foreign-exchange operations, income from investments abroad and proceeds from the national government's foreign borrowing. In September, the Philippine government raised $1 billion from its peso-denominated global bond issuance, with tenders reaching more than $13 billion. Revaluation gains on the BSP's gold holdings also contributed to the growth in the country's reserves. "We are mandated under the law to buy gold from small miners. This gold is produced locally," Tetangco told reporters. BSP's gold holdings, the price of which increased in the international market, grew 47.5 percent to $7.39 billion at end-September from $5.01 billion in the same period last year. About 13 percent of the GIR is in US dollars, the central bank said. The BSP holds international reserves for the foreign-exchange requirements of the country in case the domestic commercial banks' supply of the greenback falls short of demand. The foreign assets that the BSP holds are mostly in the form of investments in foreign-issued securities, monetary gold and foreign exchange. An ample GIR level helps prop up the peso and keeps domestic inflation at bay. The current GIR level could cover 9.4 months worth of imports of goods and payments of services and income. At its current level, the GIR could also pay 9.7 times over the country's short-term external debt based on original maturity and 5.3 times based on residual maturity. BSP officials had said that an adequate reserves level has become uncertain given the current economic situation. "But basically we look at our requirements in terms of trade and investment flows as well as net flows. We used that to determine what should be the break down in terms of currencies of our GIR. Then portion of reserve that we invest, we look for opportunities to diversify so that we can take advantage of other investment possibilities, but still keeping [the] primary objective of capital preservation," Tetangco said. He said the yield is a secondary consideration in the central bank's reserve management. With the recent developments, the policy-making Monetary Board is likely to announce new forecasts for the country's external payments position when it meets on November 18. ----- To see more of The Manila Times, or to subscribe to the newspaper, go to http://www.manilatimes.net. Copyright (c) 2010, The Manila Times, Philippines Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com, e-mail services@mctinfoservices.com, or call 866-280-5210 (outside the United States, call +1 312-222-4544). A service of YellowBrix, Inc.

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