The Philippines’ gross international reserves rose to a record $36.7 billion in June even after the central bank intervened in currency markets to sell dollars to support the ailing peso.

The record reserves reflected proceeds from the sale of the power assets and BSP’s income from investments abroad.

May’s reserves were revised down to $36.2 billion from $36.6 billion.

The BSP like the central banks of South Korea, Thailand and India, has tried to prop up its currency to help in the fight against inflation, which is largely being fuelled by rising import costs.

The peso is Asia’s worst-performing currency after the SouthKorea won, having lost more than 9 percent against the dollar so far this year as investors worry about the economic impact of inflation, which currently stands at a 14-year high of 11.4 percent.

In contrast, the peso was Asia’s top performer last year, gaining 19 percent.

Foreign reserves fell in both April and May. The central bank has been intervening in the spot currency market since at least March, traders said.

While the central bank’s international reserves have risen, its holdings of foreign currencies through forward swaps have fallen 30 percent to $6.3 billion at the end of May compared with April, and by nearly 52 percent from the peak of $13 billion in January and February.

The central bank’s currency swaps serve as a foreign exchange buffer for the monetary authority, as these represent additional foreign reserves the central bank would hold when the swap contracts are unwound.

The current level of international reserves can cover 6 months of imports of goods and payments of income and services. It is also equivalent to 5.1 times the country’s short-term external debt based on original maturity and 2.9 times based on residual maturity, or debt falling due in the next 12 months.

The end-June reserves are close to the top end of the central bank’s forecast of end-year reserves of $35 billion to $37 billion against $33.7 billion at the end of 2007.

BSP also said that the current GIR is also equivalent

to 5.1 times the country’s short-term external debt based on original maturity and 2.9 times based on residual maturity.

Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.

Also, BSP said that the level of net international reserves (NIR) as of end-June 2008, including revaluation of reserve assets and reserve-related liabilities, remained steady at $36.2 billion.

NIR refers to the difference between the BSP’s GIR and total short-term liabilities.

The June-GIR is at the top range of the BSP’s forecast that GIR this year will range between $35 to $37 billion, higher than the reported $33.7 billion in 2007.

Reserves consist of holdings of gold, special drawing rights, foreign investments and foreign exchange. A sufficient reserve level could adequately cover a government’s finances.