The country’s dollar reserves were lower in July by $1 billion to $48.6 billion due to revaluation losses in the central bank’s gold holdings.

Based on Bangko Sentral ng Pilipinas’ (BSP) data, the central bank reported revaluation gains of $200 million last May from its gold hoard on account of higher gold prices but this declined to $120 million by June.

As of end July, BSP’s gold holdings amounted to $6.76 billion, lower compared to June’s $6.86 billion.

In a statement, BSP Governor Amando M. Tetangco Jr. said that aside from revaluation losses on the BSP’s gold holdings since the price of gold in the international market have declined, the level of gross international reserves (GIR) were lower also because of National Government payments for its maturing foreign exchange obligations, as well as foreign currency withdrawals by authorized agent banks.

“These outflows were offset, however, by receipts from the foreign exchange operations of the BSP and income from its investments abroad, as well as the NG’s foreign currency deposits with the BSP,” said Tetangco.

BSP’s unofficial reserves, in the meantime, totaled $16.11 billion as of the end of the first half. The foreign exchange swaps were higher compared to May’s $15 billion.

Including swaps, Philippines dollar reserves total $64.7 billion. Forwards or swaps as derivative instruments are used as defensive approach to a highly volatile market and a financial and economic crisis.

In previous years, to prop up reserves, the BSP borrowed $2.2 billion as backup liquidity.

Documents from the BSP International Operations Department showed that the central bank has repaid the loans last year, consisting of $1.2 billion securities-backed loans from the Bank for International Settlements (BIS) and another $1 billion gold-backed loans or repurchase deposit from JP Morgan Chase.

The loans were short-term borrowings and were availed of for “international reserve management”.
BSP was able to accumulate foreign exchange from the influx of foreign capital from remittances and from the government’s dollar-denominated borrowings.

BSP is currently keeping its lowest external debt position in the last 10 years.

The current GIR level is deemed sufficient to cover nine months of imports of goods and payments of services and income and it is 9.3 times the country’s short-term external debt based on original maturity and 5.1 times based on residual maturity.