Philippines’ US dollar reserves stood at $99.701 billion as of end-July this year, higher than end-June’s $99.386 billion due to inflows from various sources such as the government’s foreign currency deposits and higher value of gold held by the Bangko Sentral ng Pilipinas (BSP).

The country’s gross international reserves (GIR) fell below $100 billion in June. The highest level so far for this year is in April of $101.76 billion.

Compared to same period in 2022, the latest GIR is slightly lower from $99.838 billion in end-July last year.

At current level, the BSP on Tuesday, Aug. 8, said the GIR remains sufficient for the country’s requirements.

But BSP’s target is to end the year with at least $100 billion or slightly higher, in reserves.

“(GIR) represents a more than adequate external liquidity buffer equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income. Moreover, it is also about 5.9 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity,” said the BSP.

The month-on-month increase in the GIR came from inflows such as the National Government’s net foreign currency deposits with the BSP, as well as the BSP’s net foreign exchange operations and net income from its investments overseas.

“(The higher GIR also) reflected mainly the upward valuation adjustments in the value of the (BSP) gold holdings due to the increase in the price of gold in the international market,” said the BSP.

The BSP’s reserve assets are composed of gold, foreign investments, foreign exchange, reserve position in the International Monetary Fund (IMF), and special drawing rights or SDRs in the IMF.

As of end-July this year, the BSP’s gold reserves amounted to $10.302 billion, up from $10.011 billion in the previous month. The current gold stock is also higher from the same period last year of $8.761 billion.

BSP’s foreign investments mainly in securities and bonds totaled $83.497 billion during the period. This amount is however lower than end-June’s $83.66 billion and from same period in 2022 of $83.517 billion.

The amount of foreign exchange held by BSP and tallied in the GIR, meanwhile, stood at $1.338 billion as of end-July, up from $1.16 billion in the previous month. Last year, it was significantly higher at $3.081 billion since the BSP was actively propping up the peso versus the US dollar at the time.

The BSP’s reserve position in the IMF totaled $801.8 million from $794.6 million previously and $753.5 million in 2022. SDR holdings remain at $3.76 billion for both June and July, it is down compared to same time last year of $3.725 billion.

The BSP considers a GIR as adequate if it can finance at least three-months’ worth of the country’s imports of goods and payments of services and primary income.

The GIR is also viewed as more than sufficient if it provides at least 100 percent cover for the payment of the country’s foreign liabilities, public and private, falling due within the immediate twelve-month period, said the BSP.

In 2022, the GIR closed the year at $99.149 billion. This was significantly lower compared to $108.794 billion at the end of 2021, the highest GIR level on record, so far.

The BSP would have been able to sustain the rise in GIR level last year, if it were not for the war on Ukraine which affected the supply and prices of both oil and non-oil commodities, global inflation and interest rates, and especially the exchange the rate volatility.

Last year, the peso depreciated to its lowest record of P59 versus the US dollar. The BSP aggressively defended the local currency and sliced off $15 billion from  the GIR to smoothen the extreme exchange rate volatility in the third and fourth quarter last year.