The Monetary Board on Monday approved the inclusion of Chinese renminbi (yuan) in the official reserves of Bangko Sentral ng Pilipinas, following the shift to closer ties between the Philippines and China.
Bangko Sentral Governor Amando Tetangco Jr. said the inclusion of RMB on BSP’s reserves became effective Oct. 13.
“The BSP may hold RMB as part of its gross international reserves to ensure the said currency is available to the banking system when needed. At present, the country’s GIR is held in various currencies, mainly the US dollar, International Monetary Fund, special drawing rights and gold,” Bangko Sentral said in a statement.
“The MB also took into consideration the country’s increasing economic linkages with China,” it said.
Data from the Philippine Statistics Authority showed Philippine exports to China rose 7.9 percent from $5.7 billion in 2010 to $6.2 billion in 2015. In the first seven months of 2016, China ranked as the fourth largest destination of Philippine exports, with 10.2 percent share ($3.2 billion) of total exports.
Meanwhile, Philippine imports from China jumped from $4.6 billion in 2010 to $11.5 billion in 2015.
China became the biggest source of Philippine imports in 2013, and this continued in the first seven months of 2016, with imports from China at 18.5 percent ($8.4 billion) of total imports.
Data from the Tourism Department showed that in July 2016, China ranked as the second biggest visitor market for the Philippines, an improvement from its fourth place ranking in 2015.
The Monetary Board said in deciding to make the RMB Philippine reserve-eligible, it took into consideration the inclusion of RMB effective Oct. 1 in the basket of reserve currencies that determine the value of the International Monetary Fund SDR.
SDR is an international reserve asset created by the IMF in 1969 to supplement its member countries’ official reserves.
“The RMB’s inclusion is an important milestone in the integration of the Chinese economy into the global financial system. The IMF’s determination that the RMB is freely usable reflects China’s expanding role in global trade and the substantial increase in the international use and trading of the renminbi. It also recognizes the progress made in reforms to China’s monetary, foreign exchange, and financial systems and acknowledges the advances made in liberalizing, integrating, and improving the infrastructure of its financial markets,” IMF said.
President Rodrigo Duterte visited China last week and brought home $24 billion worth of investment and financing deals.
China, the world’s second largest economy after the United States, reported a gross domestic product growth of 6.7 percent in the third quarter.
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