The country’s gross international reserves dropped to a seven-year low of $74.77 billion in October, after the government settled some of its foreign exchange obligations and the Bangko Sentral ng Pilipinas helped tempered the fluctuation of the peso against the US dollar.
Data from the Bangko Sentral ng Pilipinas showed Wednesday the October reserves were lower than $74.94 billion recorded in September 2018 and $80.4 billion a year ago.
The Bangko Sentral said other reasons for the decline in reserves were the government ’s net foreign currency withdrawals and foreign exchange operations. The peso dropped to as low as 54.2 against the greenback in October.
The decline in the GIR level was partially tempered by the revaluation adjustments on the BSP’s gold holdings resulting from the increase in gold prices in the international market and the bank’s income from investments abroad.
“The end-October 2018 level of GIR continues to serve as an ample external liquidity buffer and is equivalent to 6.8 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 5.7 times the country’s short-term external debt based on original maturity and 3.9 times based on residual maturity,” the Bangko Sentral said.
This was the first time in seven years that the GIR buffer fell below 7 months worth of imports and services.
At its peak of $86.139 billion in September 2016, the reserves were equivalent to almost a year worth of imports.
Net international reserves, which refer to the difference between the GIR and total short-term liabilities, also decreased by $0.16 billion to $74.76 billion as of end-October 2018 from September’s $74.92 billion.
The actual reserves level was now below the BSP’s year-end target of $80 billion, which was based on the balance of payments projection of $1.5-billion deficit.
The updated BoP projection incorporated the latest available data and reflected recent and prospective economic developments, both domestic and global.
The current account is seen to post a higher deficit of $3.1 billion, equivalent to 0.9 percent of gross domestic product.
“This mainly reflects the projected wider trade deficit as growth in goods imports largely outpaces exports growth,” the BSP said.
Gross international reserves ended 2017 at $81.5 billion.