The Bangko Sentral ng Pilipinas (BSP) registered unrealized gains of P815.36 billion as of end-February this year due in part to its participation in the peso-US dollar spot market.
BSP’s unrealized gains which under the BSP law is referred to as revaluation of foreign currency accounts, is 33.35 percent higher compared to same period last year of P611.40 billion, based on the latest BSP data.
The unrealized gains increased because the central bank was a net seller of US dollars in the first two months of the year.
To ensure exchange rate stability, the BSP maintains a presence in the spot market to manage volatility. In the first quarter this year, the peso versus the greenback averaged at P55.96.
During the first two months of 2024, the peso was weaker and averaged at P56.06 in February. The peso however recovered in March and appreciated to an average of P55.85 to the US dollar.
Last year, the BSP registered unrealized gains of P800.75 billion, up by 16.17 percent compared to P689.25 billion in 2022.
Based on a report, the BSP was mostly a net buyer of US dollars in 2023. The BSP net purchased US dollars from January to April last year, and then in July, November, and December.
The BSP, meanwhile, was a net seller of US dollars in May, August, September, and October 2023.
As far as BSP spot market intervention is concerned, BSP Governor Eli M. Remolona Jr. has said that the central bank does not intervene on a daily basis. They only enter the spot market when the peso is under stress and “we find some dysfunction in the market.”
The BSP has a flexible and free-floating exchange rate policy, which means it is market-determined. However, it is prepared to participate in the spot market to ensure orderly market conditions and to reduce excessive short-term volatility.
As of end-February, the BSP reported a net loss of P2.24 billion, higher than the net loss recorded same time last year of P1.63 billion.
But the BSP reported net gains from foreign exchange rate fluctuation of P3.75 billion, lower compared to the previous year’s P8.68 billion.
The BSP registered total assets P7.505 trillion as of end-February, up 2.2 percent from same time last year of P7.347 trillion. BSP assets are boosted by the country’s international reserves and central bank holdings of domestic securities.
Total liabilities grew 2.3 percent to P7.371 trillion versus P7.206 trillion in 2023. Total liabilities are higher due to the following: more currency in circulation; obligations from reverse repurchase facility; and revaluation of foreign currency accounts or unrealized gains.
The BSP books unrealized or realized gains or losses based on changes in price and exchange rates.