MANILA – An economist forecasts the country’s dollar reserves to further increase given the resiliency of fundamental inflows, such as overseas Filipino workers’ (OFW) remittances.
Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) on Wednesday showed that gross international reserves (GIR) rose to USD100.2 billion as of end-March 2023, up from USD98.2 billion as of end-February 2023, but lower than the year-ago’s USD 107.8 billion.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said revenues by the business process outsourcing (BPO) sector, along with the recovery of the tourism sector and the drop in crude oil prices and other commodities in the global market, among others, contributed to the rise in the foreign reserves.
Ricafort said the strengthening of the peso against the United States dollar since October last year also lent support to the GIR.
He said the latest level of GIR is equivalent to around 7.5 months of imports, which is already way above the international threshold of around three to four months of import cover.
This, he said, “could still provide (a) greater buffer/support/cushion on the peso exchange rate vs. any speculative attacks.”
Ricafort said foreign reserves are expected to get a further boost not just from the fundamental dollar inflows but also the foreign currency-denominated borrowings of both the government and the private sectors.
“Thus, still relatively high GIR at USD100.2 billion could still strengthen the country’s external position, which is a key pillar for the country’s continued favorable credit ratings for the second straight year, mostly at 1-3 notches above the minimum investment grade, a sign of resilience despite the Covid-19 (coronavirus disease 2019) pandemic that caused downgrades in other countries around the world," he added. (PNA)