Philippines’ dollar reserves rise for 7th straight month to $85B in May

MANILA, Philippines — Foreign currency inflows pushed the country’s dollar reserves higher in May, marking its seventh straight month of increases, the central bank said Friday – a development that bodes well for the strength of the peso and industries that buy raw and intermediate materials from abroad.

In a statement, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said preliminary data showed that the country’s gross international reserves rose to $85.02 billion as of end-May 2019 from $83.96 billion as of end-April 2019.  

“The month-on-month increase in the dollar reserve level was due mainly to inflows arising from the national government’s net foreign currency deposits, BSP’s foreign exchange operations and income from its investments abroad,” he said.

The hike was also aided by revaluation gains from the BSP’s gold holdings, resulting from the increase in the price of gold in the international market. However, the increase in reserves was tempered partially by payments made by the national government for servicing its foreign exchange obligations.

Diokno said the end-May 2019 dollar reserve level “serves as an ample external liquidity buffer” and is equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income. 

It is also equivalent to 5.1 times the country’s short-term external debt based on original maturity and 3.6 times based on residual maturity.

Net international reserves – which refers to the difference between the BSP’s gross reserves and total short-term liabilities – likewise increased by $1.14 billion to $85 billion as of end-May 2019 from the end-April 2019 level of $83.94 billion.

At its lowest level in October last year, the country’s dollar reserves dipped to $74.7 billion, reversing only after the central bank completed its aggressive string of anti-inflation interest rate hikes, thus making peso-denominated assets attractive once more for investors and fund managers.