Forex reserves miss 2024 goal

The Philippines’ dollar buffers declined in December due to outflows stemming from the Bangko Sentral ng Pilipinas’ (BSP) efforts to prop up a weak peso and withdrawals of the government to settle its foreign obligations, putting the year-end level below the official estimate.

The country’s gross international reserves (GIR) amounted to $106.84 billion as of end-December, lower than the preceding month’s level of $108.49 billion, preliminary data released by the BSP on Tuesday showed.

That means the GIR at the end of 2024 fell short of the upwardly revised projection of the BSP for last year, which was set at $109 billion.

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 same Washington-based institution.

The BSP attributed the decline to its “net foreign exchange operations”. Simply put, the central bank dipped into the dollar reserves to smooth out any peso volatility that can stoke imported inflation.

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The BSP also said the government took out some cash from its deposits with the central bank to settle its offshore debts, contributing to the outflows last month.

Figures showed the foreign exchange holdings of the BSP sagged by 21 percent month-on-month in December to $1.4 billion, the biggest decline among the GIR components.