By Lee C. Chipongian

Despite higher earnings from foreign exchange rate swings, the Bangko Sentral ng Pilipinas (BSP) net income in the first eight months of the year declined by 14.71 percent to P8.87 billion compared to P10.40 billion for the same period in 2016.

Based on its latest unaudited statement of income and expense, the BSP’s realized gains from foreign exchange rate fluctuations increased by 146.26 percent to P11.87 billion during the period from P4.82 billion last year.

These gains from currency movements or fluctuations coming from foreign currency-denominated transactions of the BSP continue to support the independent institution’s financial position.

As of end-August, the central bank’s revenues amounted to P42.79 billion, down 17 percent year-on-year from P51.58 billion. Revenues are mainly sourced from the central bank’s reserves and securities.

Expenses were slightly lower at P45.75 billion from P46 billion last year since the BSP has reduced interest expenses on overnight deposit facility.

The BSP’s total assets went up by 3.82 percent year-on-year to P4.75 trillion as of end-August. Total liabilities, in the meantime, stood at P4.68 trillion, more than 3.52 percent year-on-year.

The central bank’s net worth also increased to P68.80 billion from last year’s P53.26 billion.

In 2016, the BSP’s gains from foreign exchange rate fluctuations amounted to P19.11 billion, pushing the total net income to P17 billion and reversing the P4.45 billion loss in 2015.

The BSP usually incurs financial losses because of currency fluctuations and it is the management of these currency fluctuations that ensures financial stability.

Currency fluctuations remained stable for BSP transactions in the first two quarters of the year.

BSP Governor Nestor A. Espenilla Jr. said the peso has apparently steadied at the P51 to the US dollar level and that the “exchange rate has now stabilized at the present narrow range.”

Espenilla reiterated that the peso exchange rate is market-determined and flexible and that the BSP has allowed the peso its “modest and gradual depreciation.”

The BSP is currently reviewing its foreign exchange policy with an end view of liberalizing and rationalizing its rules to facilitate investments.

At the P51-range, the peso has lost seven percent year-on-year in September and market analysts expect the peso to remain weak for some time.