Dec. dollar reserves drop to 11-month low

The country’s dollar reserves as of December last year further fell to $81.045 billion, the lowest level in 11 months, on the back of foreign exchange outflows and cheaper gold, the latest Bangko Sentral ng Pilipinas (BSP) data released Friday showed.

Gross international reserves (GIR) declined for three straight months from the all-time high of $86.139 billion in September.

The end-2016 level was the lowest since January’s $80.692 billion, although still higher than end-2015’s $80.667 billion.

The actual figure was also lower than the BSP’s revised gross international reserves projection for 2016 of $83.7 billion, which had been cut from $84.8 billion previously.

In a statement, BSP Governor Amando M. Tetangco Jr. attributed the decline to “outflows arising from payments made by the national government for its maturing foreign exchange obligations, foreign exchange operations of the BSP, and revaluation adjustments on the BSP’s gold holdings resulting from the decrease in the price of gold in the international market.” The peso slid to eight-year low levels in December.

The drop in the GIR level in December was nonetheless offset by the national government’s net foreign currency deposits as well as the BSP’s income from overseas investments, Tetangco said.

The end-2016 GIR can cover 9.2 months’ worth of imports of goods as well as payments of income and services.

The dollar reserves were likewise equivalent to 5.8 times the short-term external debt based on original maturity, as well as 4.2 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 and the private sector that are due within the next 12 months.

As for net international reserves, or the difference between the GIR and total short-term liabilities, these also dropped to $81.03 billion in December from $81.43 billion the month prior.

For 2017, the BSP projected dollar reserves to rise to $84.7 billion, equivalent to 8.8 months of imports.