Forex reserves dip slightly on debt repayments

The Philippines’ total dollar reserves held by the central bank declined slightly in January from its historic high recorded at the end of 2019 due mainly to foreign currency withdrawals by the national government to pay for its foreign loans.

According to the latest data from the Bangko Sentral ng Pilipinas, the country’s gross international reserves settled at $86.42 billion as of end-January 2020 from the end-December 2019 GIR level of $87.84 billion, based on preliminary data.

“The month-on-month decline in the [dollar reserves] level reflected outflows arising from the national government’s foreign exchange withdrawal, which was used mainly to pay its foreign exchange obligations,” the central bank said.

“However, the decline was partially tempered by the BSP’s net foreign

exchange purchases from its foreign exchange operations and income from its investments abroad,” it added.

At this level, the Philippines’ stash of hard currency can cover 7.6 months’ worth of imports of goods and services and payments of primary income.

It is also equivalent to 5.3 times the country’s short-term external debt based on original maturity and 4 times based on residual maturity.

Net international reserves — which refers to the difference between the BSP’s dollar reserves, net of short-term liabilities — likewise decreased by $1.42 billion to $86.42 billion as of end-January 2020 from the end-December 2019 level of $87.84 billion.