PH Reserves Hit 5-Month High in August on Gold Valuation Gains

MANILA, Philippines — The Philippines’ foreign exchange reserves climbed to a five-month high in August, helped by a surge in the value of the central bank’s gold holdings and gains from its overseas investments despite financial-market volatility stemming from the US-Iran conflict. Latest data from the Bangko Sentral ng Pilipinas (BSP) showed the country’s gross international reserves (GIR) fell 2.1 percent from a year earlier to $104.8 billion. Even so, this was the highest level of reserves since March, when buffer funds amounted to $106.6 billion. READ: PH international reserves neared two-year low of $103.4B in July The reserves serve as the country’s main shield against external shocks, helping to finance imports and foreign debt payments in periods when export earnings or access to foreign loans dry up. The central bank holds most reserves in A-rated foreign investments, alongside gold, foreign exchange, and reserve assets with the International Monetary Fund (IMF). The reserve level currently exceeds the central bank’s revised year-end projection of $104 billion, down from $111 billion due to the US-Iran war’s impact. The BSP attributed last month’s reserve increase to upward valuation adjustments in its gold holdings, driven by higher bullion prices in the international market. The value of gold held by the central bank rose 9 percent month-on-month to $19.1 billion in August. The BSP also reported higher net income from its investments abroad. This segment was nearly flat from the previous month, reaching $79.8 billion. Other components of the reserves were also broadly stable. The Philippines’ reserve position with the IMF stood at $728 million, while its borrowing authority with the fund was nearly $4 billion. This, in turn, helped offset the 13 percent month-on-month decline in foreign currency and deposits held by the central bank, which may dip into the reserves to temper a large depreciation of the peso. READ: Gross international reserves hit 3-month high Overall, the August reserves level can cover up to 6.8 months’ worth of imports of goods and payments for services and primary income. It can likewise cover about 3.7 times the country’s short-term external debt based on residual maturity. The pile is adequate if it can cover three months of imports and provide at least 100 percent for the country’s foreign liabilities due within the next year. /pai