PH foreign exchange reserves slip in July
MANILA, Philippines — The Philippines’ foreign exchange reserves slipped in July, pulled down by a stronger US dollar and the decline in the price of gold in the world market.
Latest data released by the Bangko Sentral ng Pilipinas (BSP) showed that the country’s gross international reserves (GIR) stood at $80.4 billion in July, compared to $80.6 billion in June and July last year.
BSP Governor Amando Tetangco Jr said the decline in reserves is mainly due to the payments made by the national government for its maturing foreign exchange obligations.
The GIR is the sum of all foreign exchange flowing into the country.
The reserves serve as buffer to ensure that 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.
Tetangco added the revaluation adjustments on the Philippine central bank's gold holdings and foreign currency-denominated reserves as reasons for the decline in the country’s GIR.
Data showed the value of central bank’s gold holdings went down by 7% to $6.84 billion in July from $7.38 billion in June.
Tetangco said the decline was cushioned by the BSP's foreign exchange operations and income from investments abroad as well as the national government’s net foreign currency deposits.
Meanwhile, income from the BSP’s investments abroad went up to $71.32 billion last month from $70.65 billion in June.
The BSP could buy dollars from the foreign exchange market to prevent sharp depreciation of the peso. It can also sell to avoid sharp appreciation of the local currency.
The BSP chief said the foreign exchange reserves are enough to cover 10.6 months’ worth of imports of goods and payments of services and income.
He added the end-July 2015 GIR level is also equivalent to 6.3 times the country’s short-term external debt based on original maturity and 4.5 times based on residual maturity.
The BSP expects the Philippines to end the year with about $81.6 billion in dollar reserves.
The central bank also sees the Philippines' balance-of-payments position – the summary of all transactions between the Philippines and the rest of the world – to post a surplus of about $2 billion, a reversal of the $2.9 billion deficit booked last year. – Rappler.com