The Bangko Sentral ng Pilipinas (BSP) reported that its foreign exchange forwards or swaps totaled $16.11 billion as of end-June, up from May's $15 billion.

The BSP has been unwinding its foreign exchange (FX) swap positions in the past months and buying dollars from the spot market to smooth exchange rate volatility. In June, the BSP purchased $831 million FX and sold $530 million.

This was lower compared to May's dollar purchases of $2.43 billion and it also wound down swaps positions amounting to $1.6 billion in June. The BSP's dollar reserves in the first six months totaled $48.7 billion.

FX swaps are considered as unofficial BSP reserves. BSP's derivatives in the form of forwards and swaps decreased by 9.6 percent in May to $15 billion from April's short positions.

By central bank definition, FX swaps are foreign currency assets in both short and long positions in forwards and futures. BSP conducts FX swaps to fund FX balances. It is a financial transaction between two parties which have agreed to exchange two currencies at a certain exchange rate in an agreed future date. (LCC)