Low gold prices pull down PH dollar reserves

The Philippines’ dollar reserves slightly slid to $83.51 billion at the end of the first five months, reflecting lower global gold prices, preliminary data from the Bangko Sentral ng Pilipinas showed.

The end-May gross international reserves (GIR) level was lower than the 29-month high of $83.74 billion posted a month ago.

The BSP attributed the month-on-month decline in GIR “mainly to revaluation adjustments on the BSP’s gold holdings brought about by the decrease in the price of gold in the international market and payments made by the national government for its maturing foreign exchange obligations.”

The drop in GIR in May was partially offset by the BSP’s foreign exchange operations, as well as income from foreign investments.

The GIR level as of end-May can cover 10.4 months worth of imports of goods as well as payments of income and services.

The amount was also equivalent to 5.4 times the short-term external debt based on original maturity, as well as 4.1 times based on residual maturity.

The BSP defines short-term debt based on residual maturity as outstanding foreign debt whose original maturity was a year or less, plus principal payments on medium- and long-term loans of the government as well as the private sector that were due within the next 12 months.

Net international reserves, or the difference between the GIR and total short-term liabilities, also fell to $83.49 billion at end-May from $83.72 billion a month ago.

For 2016, the BSP projected the balance of payments or BOP surplus to reach $2.2 billion, to result in a full-year GIR of $82.7 billion, or nine months of import cover.

The latest BSP data showed that the country’s BOP position as of end-April remained in a deficit, although at a narrower $90 million from $275 million a month ago.

The end-April BOP deficit was also a reversal of the $1.257-billion surplus posted at end of the first four months of last year.