Philippine foreign reserves recover from 6-year low in August 2018

MANILA, Philippines – The country's foreign exchange reserves recovered from a six-year low in August, temporarily halting this year's drop as a result of the central bank's selling of dollars to temper the peso's decline.

According to the Bangko Sentral ng Pilipinas (BSP) on Friday, gross international reserves stood at $77.83 billion in end-August, higher than the $76.72 billion recorded in the previous month, which was the lowest since June 2012.

The new tally is good to finance 7.5 months worth of imports of goods and services. Globally, reserves are considered sufficient if it can finance at least 6 months of shipments.

Reserves are maintained by the BSP and are used to settle external obligations like imports and debts during times of financial shocks and crises.

The pile is made up of foreign money like the US dollar and Japanese yen, gold holdings, foreign investments as well as placements with the International Monetary Fund which can be tapped anytime.

The central bank, in a statement, attributed the increase on reserves to "inflows arising from the national government's net foreign currency deposits as well as the BSP's income from its investments abroad."

Broken down, the central bank's foreign investments-- which accounted for the bulk of reserves- went up 1.6 percent to $61.687 billion in August from the previous month.

Data showed IMF placements called special drawing rights also inched up to $1.194 billion.

"These were partially tempered by payments made by the (government) for its foreign exchange obligations, foreign exchange operations of the BSP, and revaluation adjustments on the BSP's gold holdings resulting from the decrease in the price of gold in the international market," the central bank said.

The value of gold in the reserves decreased 2.1 percent month-on-month to $7.622 billion, figures showed.

Foreign exchange holdings, meanwhile, rose 4.9 percent to $6.838 billion despite the central bank tapping them to temper the peso's decline against the dollar.

BSP's "foreign exchange operations" typically pertains to the central bank selling or buying dollars in the market to temper the peso's movement against the greenback.

In recent days, the peso has joined the slump of other emerging market currencies, suggesting the BSP may have gone easy on intervening in the foreign exchange market.

On Friday, the peso closed 53.73 against the dollar, marking a recovery from hitting a fresh 12-year-low of 53.80 the previous day.