By Luisa Maria Jacinta C. Jocson, Reporter
THE COUNTRY’S gross international reserves (GIR) jumped to $105.65 billion as of end-July, its highest level in over two years, the Bangko Sentral ng Pilipinas (BSP) said.
Preliminary data from the BSP showed gross dollar reserves inched up by 0.4% from $105.19 billion as of end-June.
Dollar reserves rose by 5.7% from $99.95 billion year on year.
This was also the highest level of reserves in 28 months or since the $107.3-billion level recorded in March 2022.
“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, net income from the BSP’s investments abroad, and the National Government’s (NG) net foreign currency deposits with the BSP,” it said.
As of end-July, the level of dollar reserves was enough to cover about 6.1 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.
It was also equivalent to 7.8 months’ worth of imports of goods and payments of services and primary income.
Ample foreign exchange (forex) buffers protect an economy from market volatility and ensure the country can pay its debts in the event of an economic downturn.
BSP data showed that foreign investments edged higher by 0.09% to $90.07 billion from $89.99 billion a month ago. Year on year, investments increased by 7.6% from $83.68 billion.
Reserves in the form of gold were valued at $10.31 billion as of end-July. This was up by 4.1% from $9.9 billion in the previous month and by 0.09% from $10.3 billion a year ago.
On the other hand, net foreign currency deposits slipped by 1.4% to $791.2 million from $802.2 million month on month. It also fell by 42.1% from $1.37 billion a year earlier.
As of end-July, net international reserves edged up by 0.4% to $105.62 billion from $105.16 billion the month prior.
Net international reserves are the difference between the BSP’s reserve assets or GIR and reserve liabilities, such as short-term foreign debt and credit and loans from the International Monetary Fund (IMF).
Meanwhile, the country’s reserve position in the IMF slid by 2.8% to $719.9 million as of end-July from $740.4 million as of end-June.
Special drawing rights, or the amount the country can tap from the IMF, was unchanged at $3.75 billion.
“The Philippines’ gross international reserves slightly increased in July, primarily due to higher gold valuations and positive investment returns. This maintains a robust external liquidity buffer, essential for safeguarding the country’s financial stability,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the GIR level continued to rise due to the new record highs in world gold prices, which boosted the value of the BSP’s gold holdings.
Mr. Ricafort said the country’s dollar reserves could improve in the coming months amid steady growth in overseas Filipino worker remittances, business process outsourcing revenues, foreign tourism revenues, and foreign direct investments.
The BSP expects the GIR level to settle at $104 billion by yearend.