MANILA, Philippines -- The country?s reserves of foreign currencies -- which is wealth that determines its ability to purchase imports and engage in other commercial transactions with the rest of the world -- posted yet another historic high of $49.6 billion in August.

This was according to the central bank, which reported on Tuesday that the latest gross international reserves (GIR) were enough to pay for 9.2 months worth of the country's usual imports of goods and services.

Besides showing the country's ability to buy imported products and services, the GIR, a closely watched indicator, likewise determines the capacity to pay for foreign currency-denominated debts.

The latest amount of reserves was 5.1 times the country's external obligations maturing within the short term, according to the Bangko Sentral ng Pilipinas.

GIR is boosted mainly by inflows of foreign currencies, largely the US dollar. The country's gold holdings likewise form part of the GIR.

Regular foreign exchange inflows are in the form of remittances, export revenues, and borrowings denominated in foreign currencies. In August, however, the central bank said the increase in the GIR was led by the increase in the dollars generated from foreign exchange trading.

"The increase [in the reserves] was due mainly to foreign exchange operations and income from investments abroad of the BSP, and revaluation gains on the BSP's gold holdings on account of the increase in gold prices in the international market," BSP Governor Amando Tetangco Jr. said in a statement.

The central bank, which has a policy of tempering volatility of the peso, buys and sells dollars in the foreign exchange market to avoid a sharp and sudden appreciation or depreciation of the peso. Currency volatility disrupts budget planning of businesses engaged in exports and imports, according to the BSP.

So far this year, the peso has been confronted with upward pressures amid rising inflows of foreign portfolio investments.

Thus, market players said, the BSP has been buying more dollars than usual in the foreign exchange market in a bid to temper the rise of the peso. The heavier-than-usual buying of dollars, as a consequence, has helped beefed up the country's GIR.

The BSP said the country's rising reserves of foreign currencies has the advantage of keeping confidence of foreign creditors and investors in bond and securities issued from the Philippines. The rising GIR is proof that the Philippines can meet its foreign currency-denominated obligations, the BSP said.

The central bank's buying of dollars, however, dampens its financial performance as the activity entails cost. There are projections the BSP might post a lower income this year, if not register a net loss, because of its dollar buying this year.

Tetangco, however, said the BSP should be gauged more on its ability to fulfill its mandates, including building up sufficient reserves to meet the country's imports and other external requirements, and tempering sharp volatility of the peso.

In 2007, amid a sharp appreciation of the peso, the BSP incurred a net loss of nearly P87 billion. The central bank recovered in 2008 and 2009, posting incomes of P8.9 billion and P13 billion, respectively. The rebound came amid a slowdown in the appreciation of the peso in 2008 and the depreciation of the local currency last year.