Forex reserves rise to $80.3 B in July – BSP

MANILA, Philippines - The country’s foreign exchange reserves finally inched up after thinning for two straight months due to the continued weakening of the peso against the dollar, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP officer-in-charge Diwa Guinigundo said the country’s gross international reserves (GIR) reached $80.31 billion in September, $59.6 million higher compared to $80.25 billion in end August.

The country’s foreign exchange reserves declined for two straight months after reaching $80.64 billion in June to $80,33 billion in July, and to $80.25 billion in August.

The GIR is the sum of all foreign exchange flowing into the country. The reserves serve as buffer to ensure the Philippines would not run out of foreign exchange that it could use to pay for imported goods and services, or maturing obligations in case of external shocks.

If it deems necessary, the BSP buys dollars from the foreign exchange market to prevent the sharp depreciation of the peso against the dollar. It can also sell to avoid sharp appreciation of the local currency.

Guinigundo traced the slight uptick in GIR last month to the BSP’s foreign exchange operations and its income from investments abroad as well as the government’s net foreign currency deposits.

He explained the foreign exchange inflows were partially offset by payments made by the government for its maturing foreign exchange obligations and revaluation adjustments on the BSP’s gold holdings and foreign currency-denominated reserves.

Data released by the central bank showed the BSP’s gains from foreign exchange operations jumped 26 percent to $1.08 billion in end September from $855.7 million in end August.

Guinigundo said the September GIR level remains ample as it can cover 10.3 months’ worth of imports of goods and payments of services and income.