RP gold, dollar reserves hit record high

PHILIPPINE NEWS SERVICE — DOLLARS, gold and other foreign exchange held by the central bank reached a new all-time high of $43.73 billion at the end of November, higher than the $43.15 billion reported at the end of October, the Bangko Sentral reported Monday.

The gross international reserves are closely monitored by investors and creditors because they reflect a country’s ability to pay for its imports and foreign loans. The end-November official reserves are enough to cover eight months’ worth of imports and four times the Philippines’ short-term debt.

Bankers said the central bank had been buying dollars in the spot currency market, and that many people expected the central bank’s official and unofficial reserves to continue to rise in the coming months.

In a statement, the central bank attributed the increase in its official reserves to rising gold prices that translated into revaluation gains on its gold holdings, the government’s foreign currency deposits from its loans, and income from the central bank’s investments abroad.

The central bank limits its gold holdings to 10 percent of its official reserves. At the end of November, the value of its gold holdings had reached $5.633 billion, or higher than October’s $5.275 billion.

The central bank also reported a modest rise in its investments abroad, to $36.37 billion in November from October’s $36.169 billion.

The central bank had forecast its year-end reserves to reach $43 billion, a target that it has already surpassed. If unofficial reserves are taken into account, the central bank’s reserves can easily exceed $50 billion.

Because of the steady remittance flows, higher investment and foreign loans, the central bank has forecast a $4- to $5-billion balance-of-payments surplus for 2009.

The balance of payments is a record of the country’s transactions with the rest of the world, and a surplus means the Philippines made more money from exports, remittances and borrowings than it paid out.