The country’s gross international reserves fell to a two-year low of $98.8 billion in July from $100.9 billion in June, pulled down by the government’s foreign debt payments and decreased value of Bangko Sentral ng Pilipinas’ gold holdings.
Data showed the level was the lowest foreign reserves held by the BSP since July 2020 when the amount reached $98.6 billion.
The Bangko Sentral said in a statement the latest reserves level still represented a more than adequate external liquidity buffer equivalent to 8.3 months’ worth of imports of goods and payments of services and primary income.
It was also about 6.9 times the country’s short-term external debt based on original maturity and 4.5 times based on residual maturity.
“The month-on-month decrease in the GIR level reflected mainly the national government’s foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures, and downward adjustment in the value of the BSP’s gold holdings due to the decrease in the price of gold in the international market,” the BSP said.
Net international reserves, which refer to the difference between the BSP’s reserve assets and reserve liabilities, decreased by $2 billion to $98.8 billion as of end-July from $100.8 billion in June.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said that since the start of 2022, GIR lost $9.967 billion or 9.2 percent from $108.8 billion as of December 2021.
“The decline in the GIR somewhat correlated with the weaker peso in recent months,” Ricafort said.
He said the peso already corrected to the strongest in about a month at 55.20 against the dollar on Friday, easing from the record low of 56.45 on July 12 and 14, 2022 that matched the record lows posted in 2004 and 2005.
“Nevertheless, GIR is still equivalent to 8.3 months of imports or still way above the minimum international threshold of 3 to 4 months, thereby could still provide greater cushion on the peso exchange rate vs. any speculative attacks,” Ricafort said.
Ricafort said the GIR could rebound in the coming months, amid the continued growth in the country’s structural inflows from OFW remittances, business process outsourcing revenues, foreign tourism revenues, and foreign investment inflows.
GIR hit a record $110.1 billion in December 2020. The BSP expects GIR to settle at $105 billion by end-2022.
