Gross international reserves climbed to a new record in August, as Bangko Sentral ng Pilipinas increased its foreign investments amid the sustained inflows of foreign exchange in the country.
Data from Bangko Sentral showed GIR reached $85.9 billion in August, up from $85.5 billion in July and $80.2 billion in August 2015.
“This was higher by $0.39 billion than the end-July GIR of $85.51 billion due mainly to the national government’s net foreign currency deposits and the BSP’s foreign exchange operations and income from investments abroad,” Bangko Sentral Governor Amando Tetangco Jr. said.
“These were partially offset by payments made by the national government for its maturing foreign exchange obligations and revaluation adjustments on the BSP’s gold holdings resulting from the decrease in the price of gold in the international market,” Tetangco said.
The August reserves also surpassed Bangko Sentral’s year-end target of $82.7 billion.
Data showed that among the components of GIR, Bangko Sentral’s foreign investments, mostly in US Treasury bills, reached $73.9 billion as of end-August, up from $73.3 billion in July and $70.6 billion a year ago.
Gold holdings slightly fell to $8.3 billion in August from $8.5 billion in July, on lower prices of the metal in the world market.
Other GIR components were reserve position in the International Monetary Fund at $448 million; special drawing rights, $1.18 billion; and Bangko Sentral’s foreign exchange exposure, $2 billion.
Foreign reserves exceeded the country’s foreign debt estimated at $77.6 billion as of end-March 2016.
Tetangco said at $85.9 billion, the reserves could cover 10.5 months’ worth of imports of goods and payments of services and income. It was also equivalent to six times the country’s short-term external debt based on original maturity and 4.3 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.
Net international reserves, which refer to the difference between Bangko Sentral’s GIR and total short-term liabilities, also increased $390 million to $85.89 billion as of end-August from a month ago.
GIR increases as Bangko Sentral absorbs foreign exchange in the local market and invest it overseas to stabilize the local currency amid sustained balance of payments surplus.
Bangko Sentral said it expected the BoP position to yield a surplus of $2 billion this year, or at the same level in 2015.
Current account, a component of BoP, is expected to post a surplus of $5.8 billion in 2016, equivalent to 1.9 percent of gross domestic product.