PH dollar reserves slipped in Jan

MANILA  —The Philippines’ dollar reserves dipped slightly in the first month of 2024 due to payments made by the government for its maturing foreign borrowings and a decline in the value of the Bangko Sentral ng Pilipinas’ (BSP) gold investments.

The country’s gross international reserves (GIR) settled at $103.4 billion as of January, lower than $103.8 billion in December, preliminary data released by the BSP on Wednesday showed.

Similarly, the net international reserves—or the difference between the GIR and external liabilities like short-term foreign debt and credit and loans from the International Monetary Fund (IMF)—dropped to $102.8 billion last month, from the December 2023 level of $103.7 billion.

“The month-on-month decline in the GIR level reflected mainly the national government’s payments of its foreign currency debt obligations and downward valuation adjustments in the BSP’s gold holdings due to the decrease in the price of gold in the international market,” the central bank said.

READ: PH forex reserves back above $100B as of end-October

As the term connotes, the GIR serves as the country’s buffer against external shocks. The BSP’s reserve assets consist of foreign investments, gold, foreign exchange, reserve position in the IMF and special drawing rights.

The central bank projected the GIR to end at $102 billion this year, lower than last year’s level of $103.8 billion.

Adequate buffer

Nevertheless, the end-January GIR level is more than enough to cover the country’s import needs for 7.7 months. It is also about six times the country’s short-term external debt based on original maturity and 3.9 times based on residual maturity.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said a reduction in foreign borrowings to manage foreign exchange risks, as well as a wide trade deficit could hit the country’s GIR.

But Ricafort said the buffer funds could still benefit from inflows from the country’s traditional dollar engines.

“For the coming months, the country’s GIR could still be supported by the continued growth in the country’s structural inflows from OFW (overseas Filipino workers) remittances, BPO (business process outsourcing) revenues, exports (though offset by imports), [and] relatively fast recovery in foreign tourism revenues,” he said.