Phl foreign reserves climb to 3-month high

The Philippines’ gross international reserves (GIR) rose to a three-month high of USD104.8 billion as of end-June, boosted by higher government foreign currency deposits and investment earnings, the Bangko Sentral ng Pilipinas (BSP) said.

Preliminary data released by the BSP showed that the country’s foreign exchange reserves increased from the previous month, marking the highest level since the USD106.6 billion recorded in March this year.

The BSP said the country’s reserve position remains strong enough to support external financial obligations and protect the economy from global uncertainties.

Gross international reserves consist of foreign-denominated securities, foreign exchange, gold, and other reserve assets that can be used to finance imports, pay foreign debt, stabilize the peso, and cushion the economy against external shocks.

According to the central bank, the increase in reserves was mainly driven by the national government’s higher net foreign currency deposits with the BSP and the central bank’s net income from its overseas investments.

These gains were partly offset by valuation losses resulting from fluctuations in the prices of the BSP’s gold holdings and foreign currency-denominated reserve assets, as well as the national government’s withdrawals from its foreign currency deposits to service external debt.

As of end-June, the country’s GIR was sufficient to cover 6.8 months’ worth of imports of goods and payments for services and primary income. It was also equivalent to about 3.7 times the country’s short-term external debt based on residual maturity.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the country’s reserve position is expected to remain well supported in the coming months by sustained inflows from overseas Filipino remittances, business process outsourcing revenues, merchandise exports, and the continued recovery of foreign tourism receipts.