Philippine dollar reserves rise to over $65b

PNS — Indeed former Philippine President left power with big dollar reserves.

Bangko Sentral’s participation in the foreign exchange market to smoothen the wide fluctuation of the peso against the US dollar has pushed up the country’s total foreign exchange reserves, including the so-called shadow reserves, to more than $65 billion, analysts said.

“We have been participating in the market to moderate volatility when needed,” Bangko Sentral Gov. Amando Tetangco Jr. conceded Thursday night. “We participate to reduce, minimize or smoothen fluctuation, whether the peso is appreciating or depreciating,” he added.

Analysts, however, said the participation of the Bangko Sentral in the foreign exchange market had been bolstering its gross international reserves as well as the shadow reserves now totaling $65.6 billion.

Tetangco noted the recent general weakness of the US dollar against the currencies of emerging markets, as investors parked their funds in higher interest yielding instruments amid renewed optimism about global economic prospects.

“If you look at the region as a whole, the other currencies are appreciating against the dollar,” he said. The peso closed at a two-year high of 44.12 against the greenback on Sept. 9, while the benchmark stock index of the Philippine Stock Exchange jumped to a record 3,902.56 points.

Tetangco said the surge of the local currencies also occurred in other parts of Asia. “If you look at the relative position, the Malaysian ringgit actually rose faster on a year-to-date basis. Indonesian rupiah has also appreciated and so have the Thai baht and the Singaporean dollar. This is a regional phenomenon. One of the reasons for this is the weakness of the dollar,” he said.

Analysts noted that Bangko Sentral participated in the foreign exchange market to temper the appreciation of the peso against the greenback in the previous days, as evidenced by more than $1 billion in volume traded. The market handles only $1 billion or less worth of foreign exchange transaction in a normal day.

They also noted that the central bank had pushed the country’s gross international reserves to $49.6 billion as of end-August. The dollars bought by Bangko Sentral from the market become a part of its reserves.