Iran war fallout: PH foreign reserves fall to 7-month low
The Philippines’ foreign reserves fell to a seven-month low in March, as market turbulence linked to the United States-Iran war dragged down the central bank’s overseas investments and reduced the value of its gold holdings.
Data released by the Bangko Sentral ng Pilipinas (BSP) showed gross international reserves (GIR) at $107.5 billion at the end of last month, the weakest level since August 2025.
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, as well as the country’s reserve position in and borrowing arrangements with the International Monetary Fund.
Below target
At the current pace, the reserve level is running below the central bank’s year-end projection of $111 billion.
A closer look at the report shows the central bank’s offshore investments—which account for the bulk of the reserves—fell to $80.9 billion, the lowest in more than two 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 three-month low of $20.2 billion.
Gold, typically viewed as a haven and an inflation hedge, tends to lose appeal when interest rates are high because it does not pay yields, unlike bonds.
Special drawing rights with the IMF stood unchanged at $4 billion, while the country’s contribution to the same institution dropped by 1.7 percent month-on-month to $714 million.
Meanwhile, the central bank’s foreign exchange holdings rose to $1.8 billion, the highest level in 17 months.
Overall, the latest GIR level was equivalent to 7.1 months’ worth of imports of goods and payments of services and primary income. It also covers nearly four times the country’s short-term external debt based on residual maturity.
GIR is viewed to be adequate if it can finance at least three months’ worth of the country’s imports of goods, and provides at least 100-percent cover for the payment of the country’s foreign liabilities—public and private—falling due within the immediate 12-month period.
