PHILIPPINE DAILY INQUIRER - September 1, 2009

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Forex reserves breach $40B mark

THE BANGKO SENTRAL NG PILIPINAS reported that the outstanding consumer loans extended by banks as of end-June reached P398.6 billion, up 3.3 percent from the end-March level.

If compared with year-ago level, the end-June 2009 figure was 13.1 percent higher.

MANILA, Philippines - The Bangko Sentral ng Pilipinas said the country’s foreign currency reserves was estimated to have breached the $40-billion mark last month to a new all-time high.

Despite the ongoing global economic turmoil, the BSP said the Philippines’ gross international reserves (GIR) were expected to grow due largely to the steady increase in remittances.

The central bank said news that the worst of the turmoil was over and that the world was on its way toward a recovery also encouraged investors to move away from the sidelines and invest more. Rising foreign investments were also beefing up the country’s reserves, the central bank said.

Monetary officials said emerging markets like the Philippines, which showed relative resiliency during the crisis, were starting to attract foreign portfolio investments. Investors looking for money-making opportunities are considering developing economies that have weathered the global turmoil.

After delivering a speech during the 52nd anniversary celebration of the Social Security System yesterday, BSP Governor Amando Tetangco Jr. told reporters that the country’s GIR was not expected to have shrunk in August. In fact, he said GIR could have actually grown further.

As of end-July, the GIR stood at a record $39.9 billion, or enough to cover 6.9 months’ worth of imports or better than the internationally accepted threshold level of three to four months.

The GIR, a measure of a country’s level of external liquidity, is the total amount of foreign currencies kept at and managed by the central bank. It determines a country’s ability to pay for imports and services and settle foreign currency-denominated debts.

The improving sentiment among foreign portfolio investors was also helping boost the country’s GIR. Central bank documents showed that in January to July, “hot money” registered a net inflow into the country of $265.09 million, a swing from a net outflow of $576.62 million in the same period last year.

The Philippines was 10th in the Asian Development Bank’s 2008 ranking of developing countries in Asia with the biggest reserves.

The list was led by China with $1.95 trillion. It was followed by Taiwan ($292 billion), India ($247 billion), South Korea ($200 billion), Hong Kong ($182 billion), Singapore ($174 billion), Thailand ($108 billion), Malaysia ($91 billion) and Indonesia ($49 billion).