Higher gold prices globally, coupled with the central bank’s investment income, helped the Philippines’ gross international reserves (GIR)—its stock of United States (US) dollars and other foreign currencies—recover last month from its modest decline in July.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed that the country’s GIR expanded to $105.9 billion at end-August, recovering from $105.4 billion in July. This improvement was driven by “higher global gold prices and income from BSP’s investments.”

GIR includes the BSP’s reserve assets, such as foreign investments, gold, foreign currency, its reserve position in the International Monetary Fund (IMF), and special drawing rights (SDR).

According to the BSP, the current reserve level is a “robust” external liquidity buffer. It is enough to cover 7.2 months’ worth of imports and payments for services and income.

GIR acts as a country’s backup fund to pay for imports and foreign debts, support the local currency, and protect against global economic shocks. The current GIR is also sufficient to cover short-term foreign debt by 3.4 times.

Net international reserves (NIR), the difference between GIR and foreign reserve liabilities, also increased by $500 million to $105.9 billion at the end of August, up from $105.4 billion in the previous month.

Rizal Commercial Banking Corporation (RCBC) Chief Economist Michael L. Ricafort said that despite the GIR uptick, it was partly offset by a $335 million month-on-month drop in foreign investments to $85.8 billion.

Ricafort said this reflects market volatility amid the extended deadline on United States (US) President Donald Trump’s trade talks and the higher tariffs that took effect in August.

Last month’s level remained $6.8 billion or six percent lower than the $112.7 billion posted in September last year—the US dollar stock’s record high.

Nevertheless, Ricafort noted that GIR has stayed above the $100-billion level for nearly two years now since October 2023, signaling the country’s strong external position.

This, in turn, helps stabilize the peso and supports the Philippines’ favorable credit ratings, which remain one to three notches above minimum investment grade despite the pandemic, Ricafort said.