The Bangko Sentral ng Pilipinas’ (BSP) foreign exchange (FX) swap operations dropped to $2.189 billion in June from $3.994 billion in May with the BSP in the FX spot market.
Based on data, the June FX swaps transacted by the BSP was also lower than same time last year of $3.889 billion.
The FX swaps is one of the central bank’s intervention techniques or measures. FX swaps are aggregate short and long positions in forwards and futures in foreign currencies vis-à-vis the domestic currency including the forward leg of currency swaps.
BSP’s transacted forwards and futures have a maturity breakdown of up to one month and more than one month to three months.
Of the $2.189 billion swaps in June, about $1.514 billion has residual maturity of one month and $675 million has the longer maturity of more than one month.
The FX swaps are all in long positions. Holding long positions is a signal that the BSP is buying more US dollars to prop up the peso versus the greenback. The exchange rate is currently at P55-56 level.
In addition, the BSP conducts FX swaps to sterilize its reserves accumulation. As of end-August which was the latest numbers, the country’s gross international reserves (GIR) totaled $106.924 billion.
The latest GIR is higher compared to same period in 2023 of $99.567 billion.
The BSP in a statement earlier said the GIR level continues to be “more than adequate external liquidity buffer” which is equivalent to 7.9 months’ worth of imports of goods and payments of services and primary income. It is also 6.1 times the country’s short-term external debt based on original maturity and 3.7 times based on residual maturity.
The BSP’s reserve assets are composed of gold, foreign investments, foreign exchange, reserve position in the IMF, and special drawing rights or SDRs in the IMF.
The central bank has foreign exchange of $773.4 million as of end-August which was lower than end-July’s $809 million but higher than same period last year of $644.6 million.
Meanwhile, under the GIR, the BSP’s gold reserves amounted to $10.221 billion, down from $10.231 billion same time last year and from $10.312 billion end-July. Foreign investments mainly in securities and bonds, reached $91.409 billion during the period, up from $84.133 billion in 2023 and from the previous month’s $91.109 billion.