PH dollar reserves dipped to 9-mo low in Jan
The Philippines’ dollar reserves declined at the start of the year, hitting a nine-month low after the central bank continued to defend the peso from too much volatility while the government took out some cash to pay for its foreign borrowings.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed the country’s gross international reserves (GIR) declined by 3.1 percent month-on-month to $103 billion in January.
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.
Figures showed the January level marked the fourth straight month of decline in the GIR, which hit its lowest level since April 2024.
The BSP attributed the decline to its “net foreign exchange operations.” Simply put, the central bank dipped into the dollar reserves to prop up the peso and defend it from speculative attacks. This would prevent a sharp depreciation that can stoke imported inflation.
The BSP also said the national government withdrew money from its foreign currency deposits with the central bank to settle its debts offshore, contributing to the outflows last month.
As a result, data showed the foreign exchange holdings of the BSP plummeted by 46 percent to $733.5 million, the largest drop among the GIR components.
Other components
Foreign investments of the BSP, which accounted for the bulk of the reserves, likewise dipped by 3.7 percent to $86.13 billion.
But there was a 7-percent increase in the value of the BSP’s gold holdings to $11.8 billion.
Meanwhile, special drawing rights with the IMF was steady at $3.7 billion. The Philippines’ position in the Fund, where the country is a net creditor, slightly dipped to $671.3 million.
Overall, the BSP said the GIR as of January can cover 7.3 months’ worth of imports of goods.
