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Further rise in PH GIR eyed as economy recovers

Continued reopening and recovery of economies are expected to further lift the country’s dollar reserves, which rose to USD108.54 billion in March 2022. 

In a report released yesterday, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the latest gross international reserves (GIR) of the country is among the highest after the record-high USD110.1 billion registered in December 2020. 

Ricafort said continued improvement of structural inflows to the country, such as the overseas Filipino worker (OFW) remittances, revenues of the business process outsourcing (BPO) sector, foreign tourism revenues, and foreign direct investments (FDIs) are seen as beneficial to the GIR. 

“Moreover, the continued increase in fund-raising and other investment banking activities by the country’s biggest companies/conglomerates, in view of the recent rising trend in global/local bond yields from record lows, funding preparations as the economy reopens further towards greater normalcy, could entail some increase in foreign investment inflows that could add to the country’s balance of payments (BOP) and GIR,” he said. 

The end-March 2022 GIR of the country is equivalent to 9.6 months’ worth of imports, and is way higher than the international threshold of three to four months cover. 

Ricafort said the high level of GIR is a plus for the local currency against speculative attacks. 

“Thus, near record high GIR and prospects of reaching new record highs in the coming months could further 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 pandemic that caused downgrades in other countries around the world,” he added.*PNA

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