Forex reserves dip slightly to $78.8B

The country’s foreign exchange reserves remained at comfortable levels despite a slight dip in the month of March as a result of government withdrawals for debt payments and revaluation adjustments of gold and other currency holdings.

Central bank documents released Monday showed that the country’s gross international reserves (GIR) slipped slightly to $78.8 billion as of end-March from $80.54 billion the month before.

Reserves held by the Bangko Sentral ng Pilipinas (BSP) serve as the country’ main line of defense against external crises that may lead to a shortage of foreign exchange that local companies and the government need to do business with the rest of the world.

BSP Deputy Governor Diwa C. Guinigundo said the country’s reserves remained “ample,” noting that these were enough to cover 11.1 months’ worth of imports—much higher than the international benchmark of three months.

The country’s reserves were also enough to pay for 7.1 times the country’s short-term foreign debt based on original maturity.

The decline in March was a result mainly of the national government’s payments of maturing foreign obligations, the BSP’s buying and selling of dollars from the market, and the lower value of gold and other currencies held by the central bank. A tenth of the country’s reserves are in the form of gold.

These outflows were partially offset by foreign currency deposits by the National Treasury.

A decline in the country’s reserves indicates that the country did not earn enough foreign exchange for the month to meet the economy’s requirements for the same period. This points to a possible deficit in the country’s balance-of-payments (BOP) position for the month.

In January, when the country’s BOP position swung to a record-high monthly deficit of $4.48 billion, the country’s reserves fell by a similar $3.83 billion—the biggest decline in a single month on record.

The BOP position is a summary of all the country’s transactions with the rest of the world. These transactions include remittances from overseas Filipino workers (OFW) and revenue from exports, the business process outsourcing sector and tourism industries. Outflows include external debt payments by the government and the private sector and payments of imports. Paolo G. Montecillo