The foreign exchange stock of the central bank, Bangko Sentral ng Pilipinas (BSP), outside its official foreign reserves fell by about $1.2 billion in October as it freed up dollars to temper the peso’s sharp depreciation.
Foreign exchange, locked up in foreign currency swaps and not yet booked as part of the gross international reserves (GIR), dropped to $1.52 billion at end-October from $2.69 billion at end-September, according to the latest BSP report.
This is the lowest level of foreign exchange swaps held by the central bank so far this year.
Since March, the BSP has been unwinding US dollars in its currency swaps and selling them to the foreign exchange market to prop the weakening peso while conserving the GIR.
The foreign exchange swaps have since gone down from an all-time high of about $13 billion recorded in January to February this year.
Bulk of the outstanding foreign exchange swaps as of end-October, worth about $1.13 billion, will mature in more than three months but less than a year, the BSP report said.
Currency dealers suspected that the dollars unlocked by the central bank from the forex swaps were mostly used to intervene at the spot foreign exchange market to defend the peso.
If the dealers were to assume that the decline in forex swaps approximated the volume of US dollars sold in the market, the BSP intervention would have amounted to about $11.5 billion since the start of the year.
However, the peso still depreciated by nearly 15 percent against the US dollar since January, reversing the 19-percent rise recorded in 2007. With editing by INQUIRER.net
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