PH dollar reserves drop for sixth straight month

The Philippines’ gross international reserves (GIR) shed about $863 million in August, decreasing for the sixth month in a row and settled $98.98 billion at the end of the month from $99.84 billion at end-July as the Philippine peso was then approaching new weakest positions and the country’s sustained trade deficit.

Still, the Bangko Sentral ng Pilipinas (BSP) said that, based on preliminary data, the latest GIR level represented a more than adequate external liquidity buffer.

Consisting of foreign investments, gold, foreign currencies, reserve position in the International Monetary Fund and special drawing rights, the BSP’s reserve assets are considered adequate if they can finance at least three months’ worth of the country’s imports of goods and payments of services and primary income.

As of end-August, reserves were still equivalent to 8.3 months’ worth of imports of goods and payments of services and primary income—the same as a month before.

The reserves were also about 7.1 times the country’s short-term external debt based on original maturity and 4.6 times based on residual maturity. These meant an improvement compared with end-July levels, pegged at 4.9 and 4.5, respectively.

The BSP said the continuous decrease in the GIR was mainly due to the national government’s foreign currency withdrawals from its deposits with the central bank to settle its foreign currency debt obligations and pay for its various expenditures.

At the same time, the BSP’s gold holdings decreased in value as the price of precious metal went down in the international market.

The GIR reached an all-time high of $110.12 billion in December 2020, and has been decreasing month after month since the $107.8 billion recorded last February.