PH dollar reserves slightly rose to $81B in July

The Philippines’ dollar reserves rose slightly last month as concessional loans from the country’s development partners flowed in to finance reconstruction efforts in the Visayas.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed its income from overseas investments, as well as extra dollars from its foreign exchange operations that stabilized the peso, had helped increase the Philippines’ gross international reserves (GIR).

The GIR, which is held by the BSP, serves as the country’s line of defense against external shocks. This ensures that the country has a stock of dollars in case income streams from abroad dry up.

At the end of July, the country’s GIR rose slightly to $80.95 billion from $80.73 billion the previous month.

Monetary authorities can choose to release dollars from its reserve stock to augment the supply of foreign exchange in the economy, which happens when overseas income streams slow to a trickle.

Sources of dollar income include foreign investments, remittances from migrant workers, exports and revenue from the business process outsourcing and tourism industries.

A shortage of dollars may force local firms and the government to buy the foreign exchange they need from abroad, which will devalue the peso.

“The GIR remains ample,” the BSP said in a statement. There are enough reserves to cover 11 months worth of imports—more than thrice the international benchmark of three months. The country’s reserves are also enough to cover 7.7 times the country’s external debt maturing in a year or less.

July’s increase was mostly due to the net foreign exchange deposits made by the National Treasury, which included proceeds of project and program loans from multilateral institutions, such as the Asian Development Bank and the World Bank.

“These inflows were partially offset by payments for maturing foreign exchange obligations of the national government,” the BSP said.