The country’s gross international reserves rose for a sixth straight month to hit a record $93.32 billion in June from $93.29 billion in May, the Bangko Sentral ng Pilipinas said Wednesday.
“The month-on-month increase in the GIR level reflected inflows mainly from the national government’s foreign currency deposits with the BSP. These inflows were offset, however, by the foreign currency withdrawals made by the national government to pay its foreign currency debt obligations,” the BSP said in a statement.
Data showed the reserves on a year-on-year basis jumped from $84.9 billion in June 2019 as strong dollar inflows continued to offset withdrawals.
The BSP said the end-June 2020 GIR level represented an ample external liquidity buffer equivalent to 8.4 months worth of imports of goods and payments of services and primary income.
The reserves were about 7.3 times the country’s short-term external debt based on original maturity and 4.8 times based on residual maturity.
Net international reserves, or the difference between the BSP’s GIR and total short-term liabilities, also increased by $50.2 million to $93.32 billion as of end-June 2020 from $93.27 billion in May.
ING Bank Manila Nicholas Mapa said in a report Wednesday the GIR represented the BSP’s first line of defense against a run on the currency with the central bank drawing down on its reserves in times of stark peso depreciation and building up reserves when the peso enjoys an appreciation bias.
“For the moment, BSP is not busy defending the peso with the currency one of the best performing currencies in the region despite the projected drop off in OFW remittances. Meanwhile, a narrowing trade deficit has been positive for the peso and the external position although it may have medium-term implications on the growth trajectory,” Mapa said.
“Thus, BSP will continue to remain present in the market to smooth out any sharp fluctuations in peso spot trading and will likely look to build GIR further with the peso likely to retain its strengthening bias with global central banks opening the taps to help combat the fallout from the pandemic,” Mapa said.
Reserves reached $87.84 billion at end-2019 and surpassed the $85-billion projection by the Bangko Sentral. The end-2019 level was also higher than the 2018 reserves of $79.2 billion.
The BSP said it was expecting reserves to settle at $90 billion by the end of 2020 and increase further to $91 billion by 2021, although these forecasts were already breached by June.