Gold boosts GIR to $98B end-July – BSP

Published August 14, 2020, 7:56 PM

by Lee C. Chipongian

Gross international reserves (GIR) went up to a new record high of $98 billion as of end July boosted by gold revaluation, the Bangko Sentral ng Pilipinas (BSP) reported Friday. The 7-month period GIR increased by $4.53 billion from end June’s $93.47 billion.

As of end-July, the BSP’s gold reserves stood at $12.595 billion compared to the previous $8.015 billion which it has been reporting since June last year.

The strong GIR level is due to inflows which the BSP said mainly came from its gold holdings’ revaluation gains, as well as from the National Government’s (NG) foreign currency deposits with the central bank.

In July, the Monetary Board reverted to an active strategy in the management of gold reserves, the BSP explained. This change revised the way gold is measured from amortized cost which was at $1,259.66/FTO, to fair value, at $1,979.35/FTO as of end-July, said the BSP. “This resulted in total revaluation gains of $719.69/FTO or a total of $4.58 billion,” it noted.

At this current level, the BSP cited “ample external liquidity buffer which can cushion the domestic economy against external shocks.”

The GIR also received more income from the BSP’s investments abroad. The BSP’s foreign investments amounted to $80.721 billion as of end-July from $80.891 billion end-June.

“These inflows were partly offset, however, by the foreign currency withdrawals made by the NG to pay its foreign currency debt obligations,” said BSP.

The GIR can cover up to 8.9 months’ worth of imports of goods and payments of services and primary income. This level is also 7.5 times the country’s short-term external debt based on original maturity and 4.9 times based on residual maturity.

The BSP also reported that the net international reserves or the difference between the BSP’s GIR and total short-term liabilities, amounted to $97.99 billion from $93.47 billion in the previous tally.

The BSP earlier projected that GIR for 2020 will reach $90 billion. The GIR level has surpassed the $90 billion level in April. Next year, the BSP expects a GIR level of $91 billion. In 2019, GIR stood at $87.84 billion.