Forex reserves dip to 10-month low of $81.6B on gold price drop

Lower gold prices in the international market resulted in a dip in the country’s foreign exchange reserves, but central bank officials said the level was still enough to act as a buffer to protect the country from external shocks.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Friday showed that its gross international reserves (GIR) slipped to a 10-month low of $81.6 billion at the end of June, down $400 million from May.

June marked the third month that the BSP’s GIR was down. The GIR peaked at $83.95 billion in March before falling to $83.21 billion in April, $81.96 billion in May and $81.6 billion last month.

The BSP said the decline in reserves was a result of the lower price of gold in the international market. The national government’s payments of maturing dollar-denominated obligations also contributed to the decline.

Slightly offsetting the dip were the BSP’s foreign exchange operations, foreign currency deposits by the National Treasury and income from the BSP’s investments abroad.

“At this level, reserves remain adequate to cover 11.8 months’ worth of imports of goods and payments of services and income,” the central bank statement said. The BSP added that the GIR was also equivalent to 8.3 times the country’s short-term external debt, based on original maturity.

Net international reserves, which refer to the difference between gross reserve and the BSP’s short-term liabilities, decreased by $300 million to $81.6 billion, the BSP statement added. Paolo G. Montecillo