MANILA, Philippines--Congress urged the Bangko Sentral ng Pilipinas (the Philippine central bank) on Wednesday to reduce the US dollar component of its foreign exchange reserves to 60 percent from 83 percent, to diversify risks when the greenback is depreciating against major currencies.

House Rep. Danilo Suarez, who chaired a joint hearing by the economic affairs and oversight committees on Wednesday, said the joint committee would suggest a 60-40 percent peg in the BSP's foreign exchange basket, with the larger component in favor of the US dollars and the remainder in other currencies.

Suarez also proposed the establishment of a foreign exchange body that would review the country's gross international reserves (GIR) which, based on the latest BSP report, had reached a record-high of $36.7 billion as of end-April, which is equivalent to 6.2 months of imports of goods and services.

In the same hearing, UP economics professor and former Economic Planning Secretary Felipe Medalla commended the BSP's rapid accumulation of foreign reserves over the years but supported the review toward diversification.

"I give the BSP an A+ in its management of the foreign exchange reserves. It did what it had to stabilize the economy," Medalla said.

But he said half of the reserves should be more "market-oriented" and while maturing debt and import requirements would have to be considered, about $20 billion should be "more flexible."

"[Keeping over] 80 percent in US dollars may not be the wisest," he said.

The GIR is an indicator of a country's ability to cover the foreign exchange requirements of its economy. It is composed of the central bank's gross foreign currency holdings, gold reserves, foreign investments and special drawing rights from multilateral institutions like the International Monetary Fund.

The BSP incurred a net loss of P24.8 billion in the first quarter, about six times the net loss posted in the same period last year, due to higher foreign exchange losses incurred from the sharp appreciation of the peso against the US dollar.

The central bank posted the heaviest losses in the first two months when the peso was sharply rising against the US dollar, but recouped some losses in March when the US dollar rebounded.