RP reserves up to $32.4B

PHILIPPINE NEWS SERVICE — GOLD and dollar reserves held by the Bangko Sentral ng Pilipinas rose 4.9 percent from a month earlier to $32.4 billion as of October 31 amid strong foreign exchange inflows, the monetary authority said Wednesday.

The amount can cover 5.8 months worth of imports and is equivalent to 5.4 times Manila’s short-term external debt based on original maturity and 3.3 times based on residual maturity, the bank said in a statement.

The end-September stood at $30.9 billion.

The large buildup was boosted mainly by the continued strong inflows of foreign exchange, as well as the sale of assets of state-run National Power Corp.

However, these were partly offset by debt service payments, it added.

Meanwhile, Philippine share prices closed 0.4 percent higher yesterday due to gains in index heavyweight Philippine Long Distance Telephone and mining shares, dealers said.

They said the rise in PLDT came after international credit-rating agencies affirmed the company’s foreign currency ratings, with a stable outlook.

The composite index added 14.63 points to 3,788.26 after moving between 3,769.17 and 3,802.42.

The broader all-share index inched up 3.64 points at 2,345.06.

There were 56 advancers and 41 decliners, while 68 stocks were flat.

Volume reached 2.6 billion shares valued at P5.9 billion ($135.9 million).

The local currency traded at P43.398 to the dollar.

Despite ending the range-bound session in positive territory, the market appeared nervous about high oil prices, said Gomer Tan of Regina Capital Development Corp.

“We expect this consolidation phase to continue for a few more days. Investors are largely taking a wait-and-see stance as oil prices reached new highs,” he said.

The key index failed again to break above the key resistance of 3,800 points because of such nervousness, Tan said.

The weakening dollar is also fuelling a rally in commodities.

Given the commodities’ record-breaking run, Tan said the Bangko Sentral may resist the temptation to cut key interest rates when it holds its policy meeting on November 15.

Local interest rates may be kept steady for the rest of the year despite benign inflation and the U.S. Federal Reserve’s further rate cut of 25 basis points last week, he said.

But other analysts remain optimistic that a rate cut is still in store before the year ends.

“Inflationary pressures from fuel prices notwithstanding, we perceive the central bank will be biased to cut interest rates to reduce upward pressure on the Philippine peso,” said Cem Karacadag, analyst at Credit Suisse.

“The peso has appreciated over 12 percent year-to-date, the highest in Asia so far in 2007, and we doubt the central bank will tolerate this pace of appreciation over the next several months,” Karacadag said.

PLDT advanced P15 to 3,045, off a high of 3,050.

Among mining stocks, sector leader Philex Mining rose 25 centavos to P10.75.

A pullback in Globe Telecom capped the market’s gains. The stock fell P10 to 1,720.

San Miguel A shares fell P1.50 to P55.50. Its B shares were steady at P58.