By Maricel E. Burgonio Senior Reporter

THE country’s dollar reserves rose to an all time high in October due mainly to the proceeds of a government borrowing from the international bond market, the Bangko Sentral ng Pilipinas (BSP) said.

In a statement, BSP Governor Amando Tetangco Jr. said the country’s gross international reserves (GIR) reached $43.2 billion at end-October, or $700 million higher than the $42.5 billion at end-September.
The eight-month amount already exceeds the BSP’s full-year forecast of $42 billion to $43 billion for this year, and is higher than last year’s $37.550 billion.

“The increase in the preliminary GIR level was due mainly to inflows from foreign currency deposits by the national government of the proceeds from its third bond issuance for 2009 and a loan from Asian Development Bank [ADB], and revaluation gains on the BSP’s holdings arising from the higher price of gold in the international market,” Tetangco said.

The national government raised $1 billion from the issuance of global bonds last month to fund its ballooning budget deficit. Prior to this, the government undertook two global bond issuances, raising $1.5 billion in January and $750 million in July. 

The ADB last month extended $250 million for the government’s budgetary support.

The increase in the price of gold also supported the reserves level, as the value of the BSP’s gold holdings rose to $5.275 billion in October from $5.275 billion the month before. The price of gold increased to $1.062 per fine troy ounce in October from $1.001 previously.

The BSP’s holdings of securities boosted reserves from foreign investments which increased to $36.190 billion in October from $35.190 billion in September.

In terms of dollar outflows, the bulk represented payments for maturing obligations of the national government at $4.2 billion. The BSP paid $98 million in debts over the same period.

The current GIR level could cover eight months of imports of goods and payments of services and income. It is also equivalent to 9.1 times the country’s short term external debt based on original maturity and four times based on residual maturity. GIR is viewed adequate if it can finance three months worth of a country’s imports of goods and payments of services and income.

GIR are foreign assets of the BSP held mostly as investments in foreign-issued securities, monetary gold, and foreign exchange. As the bank of last resort, the BSP holds international reserves for the foreign exchange requirements of the country in case supply from domestic commercial banks falls short of the total demand.