MANILA, Philippines — The country’s foreign exchange buffer increased slightly amid the rising valuations of the central bank’s gold holdings, staying above the $100-billion level for the 10th straight month in July, according to the Bangko Sentral ng Pilipinas (BSP).
Based on preliminary data released by the central bank, the gross international reserves (GIR) inched up to $105.65 billion in July from $105.19 billion in June. The figure was also 5.8 percent higher than the $99.9 billion a year ago.
“The month-on-month increase in the GIR level reflected mainly the upward valuation adjustments in the BSP’s gold holdings due to the increase in the price of gold in the international market,” the BSP said.
The higher GIR level in July was also due to the BSP’s net income from its investments abroad and the national government’s net foreign currency deposits with the central bank.
Data showed the value of the central bank’s gold holdings rose by four percent to $10.3 billion in July from $9.9 billion in June, while foreign investments edged higher to $90.1 billion from $89.9 billion a month prior.
The GIR is the sum of all foreign exchange flowing into the country and serves as a buffer to ensure that the government will not run out of foreign exchange that it can use in case of external shocks.
According to the central bank, the latest GIR level represents a more than adequate external liquidity buffer.
The buffer is equivalent to 7.8 months’ worth of imports of goods and payments of services and primary income. It is also about 6.1 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.
By convention, the GIR level is viewed to be adequate if it can finance at least three months’ worth of the country’s imports of goods and payments of services and primary income.
It is also considered adequate if it provides at least 100 percent cover for the payment of the country’s foreign liabilities, public and private, falling due within the immediate 12-month period.
Earlier this week, BSP Governor Eli Remolona Jr. said the Philippines has sufficient inflows to maintain an ample level of international reserves, which defends the country against external shocks.
“We expect our inflows to rise even further next year and continue to contribute to building up our reserves,” he said.
After hitting an all-time high of $110.12 billion in 2020, the buffer declined to $108.79 billion in 2021 and $96.15 billion in 2022 before picking up to $103.75 in 2023.
The BSP expects the country’s dollar reserves to hit $104 billion this year and $105 billion in 2025.
Be the first to comment