PH dollar reserves rose to all-time high of $104.5B in Nov.

The country’s dollar reserve level rose to a historic high in November on the back of the central bank’s earnings from its foreign exchange operations and foreign investments, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.

In a statement, the monetary regulator said the Philippines’ gross international reserves, based on preliminary data, rose by $710 million to $104.51 billion as of end-November 2020 from the end-October 2020 level of $103.80 billion.

“The latest [dollar reserve] level represents an adequate external liquidity buffer, which can help cushion the domestic economy against external shocks,” the BSP said, explaining that this buffer was equivalent to 11.2 months’ worth of imports of goods and payments of services and primary income.

By convention, a country’s dollar reserves are viewed to be adequate if they can finance at least three-months’ worth of the local economy’s imports of goods and payments of services and primary income.

The dollar reserves are also worth an estimated 9.3 times the country’s short-term external debt based on original maturity and 5.3 times based on residual maturity.

Short-term debt based on residual maturity refers to outstanding external debt with 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.

“The month-on-month increase in the [gross international reserve] level reflected inflows mainly from the BSP’s foreign exchange operations and income from its investments abroad,” the central bank said.These inflows were partly offset, however, by the foreign currency withdrawals the national government made to pay its foreign currency debt obligations and revaluation losses from the BSP’s gold holdings resulting from the decrease in the price of gold in the international market.

Similarly, the net international reserves—which refers to the difference between the BSP’s gross reserves and total short-term liabilities—increased by $700 million to $104.49 billion as of end-November 2020 from the end-October 2020 level of $103.79 billion.The level of dollar reserves, as of a particular period, is considered adequate, if it provides at least 100-percent cover for the payment of the country’s foreign liabilities, public and private, falling due within the immediate 12-month period. INQ