Philippines end-June foreign reserves at record high

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MANILA, July 7 (Reuters) - 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 PHP=.

The rise in reserves in June reflected proceeds from the sale of government power assets and the central bank's income from investments abroad. May's reserves were revised down to $36.2 billion from $36.6 billion.

Like authorities in South Korea, Thailand and India, the Philippine central bank 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 South Korea won KRW=, 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. (Reporting by Rosemarie Francisco; editing by Neil Fullick)