Philippine forex reserves in July hit historic high of $79.3-B

MANILA, Philippines – The country’s gross international reserves (GIR), a key measure of ability to pay maturing foreign debts and a mirror of the relative strength or weakness of the peso, hit a record high of US$79.3 billion in July.

In a statement on Wednesday, August 8, the Bangko Sentral ng Pilipinas said this $8.2 billion increase in foreign reserves from June’s $76.13 billion level was mostly from its foreign exchange operations, its income from overseas investments, and gains on revaluation of its gold holdings.

Money sent home by Filipinos working overseas — amounting to some $1.6 billion a year — are the country’s largest dollar earner. Remittances not only contribute to foreign reserves, but also support the local currency and the country’s balance of payments.

The Philippine peso gained 4.8% this year, making it one of Asia’s best performing currencies.

The foreign-currency reserves can cover 11.7 months worth of imports and equal to 6.4 times the short-term foreign debt on residual maturity.

IMF lender

Because of the Philippines’s strong external position, the country has been contributing to the International Monetary Fund’s (IMF) crisis-fighting funds.

Once a borrower and now a lender to ailing economies, the Philippines became a “creditor” country to the global lender’s Financial Transactions Plan (FTP) in 2010.

Through the BSP, the Philippines pledged last June to pump $1 billion to the IMF’s $456 billion war chest meant to help distressed economies, including those in the eurozone. – Rappler.com