THE Philippines’ dollar reserves declined to its lowest level in over a yr as a consequence of external debt payments, lower global gold prices and the central bank’s efforts to support the peso amid the Middle East war, the Bangko Sentral ng Pilipinas (BSP) said.
The country’s gross international reserves (GIR) stood at $103.974 billion at end-May, down 1.14% from the $105.177 billion it held a yr ago, preliminary BSP data showed.
Month on month, it fell by 0.34% from the $104.328 billion at end-April.
This was the bottom GIR level seen since January 2025, when it stood at $103.271 billion.
In a press release released late on Friday, the central bank said the National Government had external debt payments due throughout the period, which led to fewer foreign currency deposits and reduced its dollar reserves.
The month on month decline also reflected valuation losses on the BSP’s gold holdings amid lower global gold prices, in addition to its recent net foreign exchange operations, it added.
The decline in dollar reserves comes because the central bank said it moved to support the peso amid volatility triggered by the continuing Middle East war.
This got here as safe-haven demand for the greenback dragged the peso to a brand new historic low level of P61 to the dollar from the P58 range before the war broke out in late February.
On May 29, the peso lost 10.50 centavos to complete at P61.59 versus the dollar from its P61.485 close on April 30. It sank to a record low of P61.75 on May 18 and 19.
Still, the BSP noted that the country’s current foreign reserves level continues to offer a “robust external liquidity buffer.”
“Despite the decline, this level still provides a strong external liquidity buffer, similar to 6.9 months’ price of imports of products and payments of services and first income,” it added.
This stands well above the three-month standard and will still cover about 3.6 times the country’s short-term external debt based on residual maturity.
Dollar reserves are the central bank’s foreign assets held mostly as investments in foreign-issued securities, foreign exchange and monetary gold, amongst others.
These are supplemented by claims to the International Monetary Fund (IMF) in the shape of reserve position within the fund and special drawing rights (SDRs).
Based on BSP data, its foreign currency and deposits jumped by 24.31% to $583 million from $469 million at end-April but declined by 18.13% yr on yr from $712.1 million.
Meanwhile, the BSP’s foreign investments dipped by 0.19% to $79.247 billion at end-May from $79.395 billion a month prior and by 7.99% from $86.128 billion in the identical period last yr.
Its gold holdings also slid by 1.51% to $19.48 billion from $19.78 billion as of end-April. Annually, it climbed by 41.93% from $13.725 billion a yr ago.
The Philippines’ reserve position within the IMF stood at $712.2 million as of May, lower by 1.58% from the $723.6 million recorded at end-April and by 0.5% from $715.8 million a yr earlier.
Meanwhile, the country’s SDRs — or the quantity the Philippines can tap from the IMF’s reserve currency basket — slid to $3.952 billion at end-May, down 0.24% from $3.961 billion within the previous month. 12 months on yr, it increased by 1.46% from $3.895 billion.
Ample foreign exchange buffers protect the country from market volatility and be sure that it’s able to paying its debts within the event of an economic downturn.
By the tip of this yr, the BSP expects the country’s foreign reserves to settle at $111 billion, exceeding last yr’s $110.8 billion. — Katherine K. Chan