Foreign reserves fell by $244 million to $81.132 billion in February from $81.376 million in January, as the government settled some of its international debt and the Bangko Sentral ng Pilipinas prevented the peso from depreciating too fast.
Bangko Sentral Governor Amando Tetangco Jr. said the lower reserves was driven by outflows arising from the regulator’s foreign exchange operations.
“These were offset by net foreign currency deposits by the national government [which include the net proceeds from the new money component of the ROP global bonds issuance] and revaluation adjustments on the BSP ‘s gold holdings resulting from the increase in the price of gold in the international market,” Tetangco said.
The widening trade deficit weakened the country’s balance of payments position, creating pressures on the peso and the GIR. The peso fell to a 10-year low of 50.4 against the US dollar on March 3, before recovering this week to settle at 50.27 against the greenback Tuesday.
Bangko Sentral said the end-February reserves level could cover 9.2 months’ worth of imports of goods and payments of services and primary income. It was also equivalent to 5.9 times the country’s short-term debt based on original maturity and 4.3 times based on residual maturity.
Net international reserves, which refer to the difference between BSP’s reserves and total short-term liabilities, decreased by $240 million to $81.13 billion as of end- February from the end-January level of $81.37 billion.
Data showed that the value of BSP ‘s gold holdings increased to $7.859 billion as of end- February from $7.641 billion a month ago.
Reserves as end-December 2016 declined to an 11-month low of $81.045 billion, missing the recently revised target of $83.7 billion for the year.
The decline was due mainly to outflows arising from payments made by the national government for its maturing foreign exchange obligations, foreign exchange operations of the BSP, and revaluation adjustments on the BSP’s gold holdings resulting from the decrease in the price of gold in the international market.
The December GIR was the lowest since January 2016, when it settled at $80.692 billion. Reserves hit an all-time high of $86.139 billion in September 2016. This year, Bangko Sentral projected reserves to hit $84.7 billion.