BSP’s FX swaps down 83% at end-2024


The Bangko Sentral ng Pilipinas’ (BSP) foreign exchange (FX) swap transactions fell by 82.91 percent after unwinding $740 million at the end of 2024, lower compared to $4.331 billion at end-2023.

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.

Based on BSP data, the FX swaps are all in long positions. It is an indication that BSP is accumulating US dollars to boost the country’s reserves. The swap facility is also one of the central bank’s intervention tools to protect the peso against other foreign currencies.

The $740 million swaps as of end-December last year have a residual maturity of up to one month. There are no maturities longer than one month or three months during the period.

The end-December FX swaps were lower than end-November transactions of $874 million.

Besides the use of FX swaps as market intervention, the BSP also use swaps to sterilize its reserves accumulation.

The BSP-managed US dollar reserves or the gross international reserves (GIR) amounted to $106.256 billion as of end-2024, up from end-2023’s $103.753 billion.

The BSP’s reserve assets are composed of gold, foreign investments, foreign exchange, reserve position in the International Monetary Fund (IMF), and special drawing rights or SDRs in the IMF.

The BSP considers the latest GIR level as adequate external liquidity buffer equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income. It is also about 3.7 times the country’s short-term external debt based on residual maturity.

As a matter of policy, the BSP’s participation in the exchange rate market is limited to tempering sharp fluctuations in the exchange rate. The BSP also does not target nor avoid any level of the peso and does not alter currency trends.

Currently, the peso at the mid P58 level is weaker than the US dollar.