Foreign debt payments, peso defense pulled down GIR in Nov

The Philippines’ dollar buffers declined in November due to withdrawals made by the government to pay for foreign debt while the Bangko Sentral ng Pilipinas (BSP) dipped into the reserves to prop up a peso that revisited the record-low territory of 59:$1.

Preliminary data from the BSP showed the country’s gross international reserves (GIR) decreased by 2.34 percent month-on-month to $108.5 billion in November.

Nevertheless, the latest GIR level is still running above the $106-billion projection of the central bank for 2024.

The GIR serves as the country’s buffer against external shocks. The reserve assets consist of foreign investments of the central bank, gold and foreign exchange as well as borrowing authority with the International Monetary Fund (IMF) and the country’s contributions to the IMF.

The BSP attributed the GIR decline last month to “net foreign currency withdrawals” of the government, meaning the state took out more dollars than it deposited with the central bank to pay for external debt and various spending needs.

The dollar reserves—which the BSP can use to intervene in the foreign exchange market to soothe any volatility that may stoke imported inflation—also went down after the central bank defended a weak peso that hit the record-low level of 59 twice last month.

Gold lost value

Data showed the foreign exchange reserves held by the BSP sagged by 18 percent in November to $1.75 billion, posting the largest month-on-month decline among the GIR components.

The BSP also blamed the GIR slump in November to downward valuation adjustments in its gold holdings due to lower international prices of the precious metal. Figures showed the value of gold kept by the central bank fell by 2.88 percent to $11.03 billion.

Elsewhere, foreign investments of the BSP, which accounted for the bulk of the entire GIR, inched down by 2.04 percent to $91.21 billion.

Special drawing rights with the IMF was relatively flat at $3.81 billion, while the country’s position in the Fund declined by 2 percent to $668.2 million. INQ