DIOKNO SAYS BSP SHIFTED TO ACTIVE GOLD TRADING
BSP Governor Benjamin Diokno said the Bangko Sentral ng Pilipinas is changing its strategy from passive to active gold trading as the central bank aims to reduce its share from the country’s gross international reserves (GIR).
On Friday, the BSP chief told the House of Representatives that the Monetary Board’s policy-setting decided to keep gold’s share in the GIR to only 10% by selling it.
Diokno said that of the record-high $98 billion gross international reserves (GIR) as of end-July, “12% is in gold form.”
“Studies show that the optimal portfolio mix of gold to GIR should be 9.8%. A WB (World Bank survey showed that the average allocation of gold relative to reserves should be around 9.55%,” he said.
Citing a World Gold Council report, the BSP chief said a portfolio with a 10% allocation to gold had a higher risk-adjusted return than 0% or 5% allocation.
“At the moment, the ratio of gold to GIR exceeds 10%. BSP will always be opportunistic in its reserves management,” Diokno said.
He noted that a new law makes BSP gold purchases from small miners more attractive.