July dollar reserves drop due to foreign debt payments, gold losses

The Philippines' gross international reserves (GIR) in July fell $101 million month-on-month after the government settled its foreign debts and incurred losses on the central bank's gold holdings due to lower gold prices in the world market, the Bangko Sentral ng Pilipinas (BSP) said Friday. Based on central bank data, the country's GIR reached $48.603 billion in July, slightly lower than the record level of $48.704 billion in June. The country's GIR in July was, however, $8.434 billion higher than the $40.169-billion reserves registered for July 2009. The BSP's gold holdings value dropped 2.7 percent to $6.676 billion in July from $6.859 billion in June. But the value was 37.5 percent higher than the central bank's gold holdings of $4.856 billion in July of last year. The GIR is the sum of all foreign exchange flowing into the country. BSP Gov. Amando Tetangco Jr. said the current GIR level could cover nine months of imports of goods and payments of services and income. The GIR is also equivalent to 9.3 times the country's short term external debt based on original maturity and 5.1 times based on residual maturity, he said. Tetangco said he is confident that the country's international reserves could breach the upper end of the revised forecast of $50 billion this year on the back of strong exchange inflows from higher income from the central bank's foreign exchange operations, investments abroad, and gold holdings. The central bank's Monetary Board sees the country's GIR hitting between $49 billion and $50 billion instead of the revised forecast of $48 billion to $49 billion this year. The BSP originally expected the GIR to hit $47 billion to $48 billion this year. —JE/OMG, GMANews.TV