Foreign currency inflows pushed the country’s dollar reserves higher in June—their highest level in the Philippines’ history—a development that bodes well for the strength of the peso and industries that buy raw and intermediate materials from abroad.
Preliminary data showed the country’s gross international reserves (GIR) rose by $0.02 billion to $85.38 billion as of end-June 2019 from $85.36 billion as of end-May 2019, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said on Friday.
“The month-on-month increase in the dollar reserve level was due mainly to inflows arising from the revaluation gains from the BSP’s gold holdings resulting from the increase in the price of gold in the international market, the national government’s net foreign currency deposits, BSP’s foreign exchange operations and its income from its investments abroad,” he said.
However, the increase in reserves was tempered by payments made by the government for servicing its foreign exchange obligations.
The end-June 2019 dollar reserves level is equivalent to 7.4 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 3.7 times based on residual maturity.
At its lowest level in October last year, the country’s dollar reserves dipped to $74.7 billion, reversing only after the BSP completed its aggressive string of anti-inflation interest rate hikes, thus making peso-denominated assets attractive once more for investors and fund managers.