THE country’s gross international reserves (GIR) fell in July from the year-earlier level, despite a $217 million increase from June on the back of net foreign currency deposits.
The GIR stood at $81 billion in July, which the central bank said still provides 11 months’ buffer for the economy.
The level rose from $80.7 billion in June, but compared with the level in July 2013 of $83.2 billion, GIR was down by $2.2 million, Bangko Sentral ng Pilipinas (BSP) data showed on Thursday.
GIR refers to foreign assets that are readily available to and controlled by the central bank for direct financing of payments imbalances. It consists of holdings of gold, special drawing rights, foreign investments, and foreign exchange. Higher reserves provide monetary authorities with some flexibility in managing both the exchange rate of the peso and domestic inflation.
The BSP had revised downward its earlier projection for full-year GIR to $85.3 billion from $88 billion after it cut its balance of payments (BOP) projection also for this year to just $1 billion.
Explaining the month-on-month increase in July, the BSP said it was due mainly to the net foreign currency deposits from the Treasurer of the Philippines, “which included proceeds of project and program loans from multilateral and bilateral institutions.”
The BSP’s foreign exchange operations and the monetary authority’s income from its investments abroad also contributed to the higher GIR.
The inflows were partially offset by payments by the government of its maturing foreign exchange obligations and the revaluation of BSP gold holdings, the central bank added.
Ample for 11-month imports
“The GIR remains ample as it can cover 11 months’ worth of imports of goods and payments of services and income. It is also equivalent to 7.7 times the country’s short-term external debt based on original maturity and 5.7 times based on residual maturity,” the monetary authority stated.
The Philippine still enjoys a comfortable external position thanks to the healthy dollar reserves, said one analyst.
“The reserves are large enough to meet external risks, and the external position remains comfortable for the Philippines,” Rahul Bajoria, economist at UK-based investment bank Barclays, said in an e-mail to The Manila Times.