PH dollar holdings up in Aug. on gold rally, FX assets
The Philippines’ international reserves swelled in August, buoyed by an increase in the central bank’s foreign exchange holdings and a jump in the value of its gold stockpile as global bullion prices surged.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed the country’s gross international reserves (GIR) went up to $105.9 billion, from July’s level of $105.4 billion.
The GIR serves as the country’s buffer against external shocks. It also helps an economy finance its imports and foreign debt obligations in extreme conditions when there are no export earnings or foreign loans. The BSP can likewise dip into the buffer funds to stabilize the peso.
The reserve assets consist of A-rated foreign investments of the central bank, gold and foreign exchange, as well as borrowing authority with the International Monetary Fund (IMF) and the country’s contributions to the same Washington-based institution.
At this point, the GIR is running above the BSP’s forecast of $104 billion level by year’s end.
Offshore investments
Figures showed offshore investments of the BSP, which accounted for the bulk of the reserve assets, were nearly flat from the preceding month to $85.8 billion.
The headline boost came instead from gold. The value of the central bank’s holdings jumped 5 percent to $14.5 billion, riding a late-month rally in bullion. Global prices surged to $3,429 an ounce, according to the World Gold Council, as geopolitical tensions stoked demand for the safe-haven asset.
The BSP’s foreign-exchange assets also rose, up 8 percent to $898 million, while contributions to the IMF held steady at $736 million. The bank’s special drawing rights with the IMF were largely unchanged at $3.9 billion.
Overall, the latest GIR level can cover 7.2 months’ worth of imports of goods and payments of services and primary income. It also covers about 3.4 times the country’s short-term external debt based on residual maturity.
By convention, GIR 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.
