$86b in forex reserves seen excessive, costly, beyond optimal

The country`s nearly $86-billion foreign exchange reserves, which are projected to rise further due to robust inflow of remittances and portfolio investments, were deemed excessive, costly and beyond optimal. This is the opinion of Philippine Institute for Development Studies (PIDS), which said in one of its latest research notes that the economy might be missing out on prudent investment opportunities as it kept more than enough foreign exchange liquidity. PIDS also said the Bangko Sentral ng Pilipinas (BSP), which manages the gross international reserves (GIR), was incurring huge interest expenses as it continued to build the reserves. It explained that the central bank`s dollar buying activities—which boosts the GIR—resulted in the infusion of peso liquidity into the economy.