GIR weighed down by MidEast war-induced volatility
The Philippines’ gross international reserves (GIR) fell to the lowest level in more than a year in April, as the central bank’s holdings of gold, foreign exchange and offshore investments declined amid extreme market volatility triggered by the Middle East crisis.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed the country’s GIR at $104.1 billion as of last month. This was the lowest level since January 2025, back when the reserves had amounted to $103.3 billion.
The reserves serve as the country’s main shield against external shocks, helping finance imports and foreign debt payments in periods when export earnings or access to foreign loans dry up.
The reserve stockpile is made up largely of A-rated foreign investments held by the central bank, alongside gold and foreign exchange. It also includes the country’s reserve position in and borrowing arrangements with the International Monetary Fund.
At the current pace, the reserve level is running below the central bank’s year-end projection of $111 billion.
Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said the drop in the GIR was “largely the result of active policy, not stress.”
“The BSP likely sold dollars to smooth excessive peso volatility, which explains the sharp decline in the FX (foreign exchange) component,” Ravelas said. “Add to that routine external payments, some valuation losses in bonds and gold, cautious global investors, and reserves naturally dipped.”
A closer look at the report shows the central bank’s offshore investments—which account for the bulk of the reserves—fell to $79.2 billion, the lowest in more than three years.
The drop came as the conflict in the Gulf region, which had erupted in late February, rattled global markets and triggered a flight to safe-haven assets. The upheaval also set off an oil-price shock that stoked inflation fears and expectations of higher interest rates.
Pressure was compounded by a decline in the value of the central bank’s gold holdings, which slipped from a record high to a four-month low of $19.8 billion.
Gold, typically viewed as a safe haven and an inflation hedge, tends to lose appeal when interest rates are high because it does not pay yields, unlike bonds.
Meanwhile, the central bank’s foreign exchange holdings fell to $464.9 million, the lowest level in a decade or since April 2015’s $300.2 million.
Special drawing rights with the International Monetary Fund rose to $3.96 billion, while the country’s contribution to the same institution went up to $723.6 million.
