BSP Net Losses from FX Rate Fluctuations Reach P86.3 Billion

Manila Bulletin, February 14, 2013 | Go to article overview

BSP Net Losses from FX Rate Fluctuations Reach P86.3 Billion


The Bangko Sentral ng Pilipinas (BSP), an independent government-owned and controlled corporation, continue to report net losses in the last three years due to realized losses from fluctuations in foreign exchange (FX) rates.

Based on updated data as of the end of November, the BSP's net losses amounted to P86.3 billion, 167.3 percent higher than losses reported in the same period in 2011.

Losses incurred from fluctuations in foreign exchange rates or FXR rose to P46.34 billion from P36 billion in 2011. The previous two years' FXR fluctuations losses were lower compared to 2010's P90 billion. The highest net loss from foreign exchange transactions of the BSP was in 2007 of P113.7 billion.

The BSP's foreign exchange losses result from dealing with the surge in capital inflows and from monetary actions that ensure the foreign exchange market remains stable. These losses come from foreign exchange assets and liabilities.

In the meantime, provision for foreign exchange losses amounted to a negative of almost P40 billion from a positive position of P6 billion in the same period in 2011. This is the first time in six years that provision for losses due to FXR fluctuations was in the negative. This provision is provided, said the BSP, for "potential losses arising from the volatility of the exchange rate." The peso volatility at the end of 2012 - as measured by the coefficient of variation of the daily average exchange rates - was higher at 0.815 percent compared to 2011's 0.523 percent.

With continued losses, the central bank has not been able to remit dividends to the National Government. …

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BSP Net Losses from FX Rate Fluctuations Reach P86.3 Billion
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