By Luisa Maria Jacinta C. Jocson, Reporter
THE Philippines’ dollar reserves rose to $106.65 billion as of end-February, in response to the Bangko Sentral ng Pilipinas (BSP).
Preliminary data from the central bank showed gross international reserves (GIR) rose by 3.3% month on month from $103.27 billion as of end-January.
This was also 4.6% higher than $101.99 billion in the identical period a 12 months ago.
The dollar reserves were also the very best in three months or for the reason that $108.49 billion posted in November.
Ample foreign exchange buffers protect the country from market volatility and be certain that it’s able to paying its debts within the event of an economic downturn.
“The month-on-month increase within the GIR level reflected mainly the National Government’s (NG) net foreign currency deposits with the BSP, which include proceeds from its issuance of Republic of the Philippines global bonds,” the central bank said.
In January, the NG raised $3.3 billion from the sale of 10-year and 25-year fixed-rate global bonds and seven-year euro sustainability bonds. It was NG’s first global bond offering for the 12 months.
BSP data showed the extent of dollar reserves as of end-February is sufficient to cover about 3.8 times the country’s short-term external debt based on residual maturity.
It is usually corresponding to 7.5 months’ price of imports of products and payments of services and first income.
The rise in dollar reserves was also attributable to the “upward valuation adjustments within the BSP’s gold holdings attributable to the rise in the value of gold within the international market, and net income from the BSP’s investments abroad.”
The worth of the central bank’s gold holdings went up by 2.5% to $12.5 billion at end-February from $11.75 billion a month ago. It likewise jumped by 16.6% from $10.34 billion in the identical period in 2024.
Foreign investments stood at $89.41 billion as of end-February, up by 3.5% from $86.37 billion as of end-January and by 3.4% from $86.45 billion a 12 months prior.
Meanwhile, net international reserves increased by 3.3% to $106.6 billion from $103.2 billion as of end-January.
Net international reserves check with the difference between the BSP’s reserve assets (GIR) and reserve liabilities, including short-term foreign debt, and credit and loans from the International Monetary Fund (IMF).
The BSP’s reserve assets also include foreign investments, foreign exchange, reserve position within the IMF and special drawing rights (SDR).
Reserves with the IMF dipped by 0.2% to $670.2 million as of end-February from $671.3 million a month earlier. It also declined by 10.9% from $752.5 million within the year-ago period.
SDRs — or the quantity which the Philippines can tap from the IMF’s reserve currency basket — edged higher by 0.2% to $3.74 billion from $3.73 billion within the previous month. 12 months on 12 months, it dropped by 1.1% to $3.78 billion.
“The rise in GIR reflects strong external buffers, that are crucial for shielding the economy against external shocks,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said.
Rizal Business Banking Corp. Chief Economist Michael L. Ricafort said the rise in GIR was attributable to the NG’s latest global bond issuance and continued gains in gold holdings.
“Gold holdings continued to enhance, largely reflecting and consistent with the two.1% monthly gain in world gold prices, which again posted latest record highs recently partly attributable to some flight to secure havens corresponding to gold amid the recent global market volatility,” he said.
Mr. Ricafort also noted the rise in foreign investments amid gains in the costs of US Treasuries in February.
“The benchmark 10-year US Treasury yield already eased to 4.3%, among the many lowest in three months,” he added.
For the approaching months, Mr. Ricafort said the GIR could possibly be supported by the continued growth in overseas Filipino employee (OFW) remittances, business process outsourcing (BPO) revenues, exports and the quicker recovery in foreign tourism revenue.
“OFW remittances are also expected to stay resilient, helping bolster reserves. BPO and tourism can generate foreign exchange inflows that may strengthen GIR,” Mr. Rivera added.
Oikonomia Advisory and Research, Inc. economist Reinielle Matt M. Erece likewise said the GIR might be driven by “strong OFW remittances, foreign investments, a weak peso, and trade diversion.”
The BSP is expecting a GIR level of $110 billion for this 12 months.
Mr. Rivera said the central bank’s forecast for dollar reserves this 12 months is attainable, though this is able to rely on the BSP’s intervention within the FX market.
“A depreciating peso could lead on to higher import costs, increasing demand for the US dollar which can put pressure on reserves. Nevertheless, a weaker peso also advantages dollar-earning sectors, which could offset a number of the risks,” Mr. Rivera said.
“The next import bill attributable to infrastructure projects and rising oil prices could widen the deficit, requiring the BSP to make use of reserves to stabilize the peso,” he added.
The peso closed at P57.206 per dollar on Friday, strengthening by 11.4 centavos from its P57.32 finish on Thursday. This was the peso’s best finish in nearly five months or since its P57.205-a-dollar close on Oct. 11, 2024.
“A weak peso shouldn’t be necessarily disadvantageous, because it makes exports more competitive in international markets. Higher exports mean more dollar inflows,” Mr. Erece said.
“Add to that the continued trade conflict amongst large producers, which could be a chance for the Philippines to be another trading partner for other countries.”
