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Strong gold holdings push dollar reserves to $107.95 billion

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The Philippines’ dollar reserve jumped to $107.95 billion as spot gold prices spiked in the international market, pushed by the hotter-than-expected inflation printout in the United States because of excessive injection of capital into the system.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed that the latest gross international reserves (GIR) in October is $1.35 billion higher than the record $106.6 billion end-September 2021.

“The month-on-month increase in the GIR level reflected mainly the national government’s (NG) net foreign currency deposits with the BSP,” the BSP explained.

The NG earlier issued its maiden retail dollar bond or RDB — the proceeds of which, amounting to $1.59 billion, were deposited to the BSP.

The unyielding inflation in the US is spilling over across various markets, with investors rushing to gold as a hedge. Commodities watchers predict gold could slice through $1920 this month after breaking above $1875.

According to the central bank, the improved GIR data is primarily influenced by the upward adjustment in the BSP’s gold holdings value.

“The latest GIR level represents a more than adequate external liquidity buffer equivalent to 10.8 months’ worth of imports of goods and payments of services and primary income,” it said.

“Moreover, it is also about 7.8 times the country’s short-term external debt based on original maturity and 5.4 times based on residual maturity,” it added.

The BSP explained that a country’s GIR is considered adequate if it can finance at least three months’ worth of its imports of goods and payments of services and primary income.

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