Foreign currency inflows pushed the Philippines’ dollar reserves higher in September — their highest level in the country’s’ history—which boded well for the strength of the peso and industries that bought raw and intermediate materials from abroad.
Preliminary data showed the country’s gross international reserves rose by $130 million to $86.16 billion as of end-September 2019 from $86.03 billion at the end of the previous month, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said.
“The increase in the [dollar reserve ]level month-on-month reflects the national government’s foreign currency deposits and the central bank’s income from its investments abroad,” he said in a statement.
“However, the increase in reserves was partially tempered by payments made by the government’s servicing of its foreign exchange obligations,” the BSP chief added.
He explained that the end-September 2019 level of gross international reserves 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 5.4 times the country’s short-term external debt based on original maturity and 3.9 times based on residual maturity.
Net international reserves—which refers to the difference between the BSP’s dollar reserves and total short-term liabilities—likewise increased by $130 million to $86.15 billion as of end-September 2019 from the end-August 2019 level of $86.02 billion.
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.