MANILA, Philippines — The Philippines’ dollar reserves rose for the second month in a row despite the onset of the coronavirus crisis in March, thanks to the central bank’s foreign currency trading and the government’s foreign currency inflows.
Data from the Bangko Sentral ng Pilipinas showed that the country’s gross international reserves level, based on preliminary data, rose by $810 million from the end-February 2020 level of $88.19 billion to $89 billion as of end-March 2020.
“At this level, the [dollar reserves] can cover 7.9 months’ worth of imports of goods and services and payments of primary income,” the central bank said in a statement, adding that the level is also equivalent to 5.3 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.
“The month-on-month increase in the dollar reserve level reflected inflows arising from the BSP’s foreign exchange operations as well as income from its investments abroad, and the national government’s foreign currency deposits with the BSP,” it said.
These inflows were partly offset, however, by payments made by the national government for servicing its foreign currency debt obligations.
A higher level of dollar reserves helps stabilize the peso against foreign currencies, primarily the US dollar, as the need for hard currency by parties needing to buy foreign raw materials or finished products or investors wanting to repatriate their assets can easily be met by authorities.
Foreign exchange data from the Bankers Association of the Philippines shows that the local currency has weathered the coronavirus pandemic well, in fact, strengthening from the P50.30 level from over P52.50 when the country was put on lockdown.
Net international reserves — which refers to the difference between the BSP’s gross reserves and total short-term liabilities — likewise increased by $810 million to $88.99 billion as of end-March 2020 from the end-February 2020 level of $88.18 billion.
The central bank said its the latest statement on the country’s the preliminary dollar reserve data was delayed due to the enhanced community quarantine in Luzon as a precautionary measure against the spread of COVID-19, adding that the delayed data on the overall balance of payments position and final gross international reserve level will be published once these become available.
Short-term debt based on residual maturity refers to outstanding external debt with an original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.