Philippine dollar reserves rise in May

MANILA, Philippines — The Philippines’ dollar reserves climbed for the seventh consecutive month in May, the Bangko Sentral ng Pilipinas reported Friday.

The country’s gross international reserves, or GIR, rose to $85.02 billion last month from $83.88 billion in April.

“The month-on-month increase in the GIR level was due mainly to inflows arising from the National Government’s (NG) net foreign currency deposits, BSP’s foreign exchange operations and income from its investments abroad, and revaluation gains from the BSP’s gold holdings, resulting from the increase in the price of gold in the international market,” the central bank said.

“However, the increase in reserves was tempered partially by payments made by the NG for servicing its foreign exchange obligations,” it added.

International reserves are foreign assets of the BSP held mostly as investments in foreign-issued securities, monetary gold and foreign exchange.

Being the lender of last resort, the BSP holds international reserves for the foreign exchange requirements of the country in case the supply from domestic commercial banks falls short of the total demand.

As the term connotes, the international reserves serve as a stand-by fund to help the economy stay afloat during an exchange crisis or in time of national emergency.

According to the BSP, the GIR level in May serves as an “ample external liquidity buffer,” with an equivalent of 7.5 months import cover, as well as payments on services and primary income. 

It is also equivalent to 5.1 times the country’s short-term external debt based on original maturity and 3.6 times based on residual maturity. — Ian Nicolas Cigaral