BSP’s international reserves fall slightly to $38.87b

The gross international reserves of the Bangko Sentral dropped to $38.87 billion at the end of March from $38.92 billion at end-February on huge foreign debt payments, the central bank said yesterday.

The reserves, consisting of dollars, gold and foreign currency holdings, dropped for the second consecutive month and were enough to pay for over six times the country’s imports and close to thrice its short-term debt.

About $3.4 billion in foreign loans matured in March.

Gold holdings fell slightly in value to $4.55 billion at the end of March from February’s $4.69 billion as the price of metal dropped to $872 million per troy ounce from over $900 in February.

The central bank’s foreign investments, meanwhile, were hardly changed to $33.23 billion from February’s $33.21 billion, while foreign exchange holdings increased to $959.19 million from $884.76 million.

The central bank’s foreign exchange swaps, or unofficial reserves, fell to $1.667 billion at the end of February from January’s $2.55 billion as the Bangko Sentral sold dollars in the spot market to ease the pressure on the peso and reduce foreign debt.

The foreign exchange swaps represent dollars that the central bank lends to banks in exchange for pesos over a specified period of time. The central bank in 2007 resorted to the forex swaps to sterilize the excess liquidity coming from huge inflows by delaying the conversion of incoming dollars into pesos that could have fueled inflation.

The peso fell from 47.3 against the dollar in the beginning of February to 48.2 at the end of the month.

The central bank trimmed its debt by $500 million in February when it paid a loan it tapped from Bank for International Settlements in June last year. The payment reduced the central bank’s liabilities to $1 billion from $1.52 billion in January.

The forex swaps are not included in the gross international reserves of the central bank.–Eileen A. Mencias