BSP mulls selling gold reserves to keep it at 10% of GIR

The Bangko Sentral ng Pilipinas (BSP) is considering to sell some of its gold reserves to reduce its share from the country’s gross international reserves (GIR).

During the House of Representatives’ budget hearing for fiscal year 2021, Deputy Speaker LRay Villafuerte asked the central bank if it considers to increase its gold reserves in response to China and Russia’s reported stockpiling of gold.

In response, BSP Governor Benjamin Diokno said that of the record-high $98 billion gross international reserves (GIR) as of end-July, “12% are in gold form.” 

The central bank chief said the Monetary Board has decided to keep gold’s share in the GIR to only 10%.

“We have decided, the Monetary Board has decided that we should be actively trading part of the gold,” Diokno said.

“Hindi po kami actively mamimili from external market... In fact, kino-consider namin na magbenta,” he said.

Villafuerte asked why the BSP is considering to sell its gold reserves, the central bank chief said, “Sobra sobra po ang gold natin as part of gross international reserves.”

“We made a policy to keep it at 10%,” he said.

Internal reserves are used by central banks to regulate a country’s currency. Reserves can be in gold form or in foreign currency such as the dollar.

The BSP earlier said the $98-billion GIR is an “ample external liquidity buffer which can cushion the domestic economy against external shocks.”—LDF, GMA News