The nation’s dollar reserves, which serve as protection from overseas funding constraints, slipped slightly in November, indicating a possible slowdown in the flow of money entering the country.
A stronger dollar during the month led to a slight dip in the value of assets denominated in other currencies that the central bank holds as reserves.
The Bangko Sentral ng Pilipinas’ (BSP) participation in the foreign exchange markets, as well as debt payments by the national government also contributed the lower reserves for the month, data released on Friday showed.
Despite the dip, the country’s gross international reserves (GIR) “remains ample,” the BSP said, based on internationally accepted benchmarks.
At the end of November, the country’s GIR stood at $78.9 billion, declining by $400 million month-on-month.
Over the same period last year, end-November reserves were down 5.5 percent.
The dip in reserves points to a likely deficit in the country’s November balance of payments (BOP) position, which is an accounting of all transactions between the Philippines and the rest of the world.
The BOP is the difference between the amount of money that enters and leaves the country.
By the end of the year, the country is expected to post a BOP deficit of $3.4 billion, worse than last year’s $5.1-billion surplus.
Excess foreign exchange that enter the country are often bought by the BSP from the open market to keep this surplus from affecting the peso’s value excessively.
These dollars are then held as reserves.
BOP deficits trigger the reserve, forcing the BSP to flood the market with dollars to keep the peso firm.
Economies need a steady supply of foreign currencies to allow private companies and the government to do business with the rest of the world.
These include imports of goods and services, and foreign debt payments.
At the end of November, the BSP said the country’s reserves were enough to cover 10.7 months’ worth of imports—higher than the traditional benchmark of three to six months used overseas.