Philippine dollar reserves slip to USD 103 B at end-January

The Philippines’ dollar reserves dipped in January, according to preliminary data by the Bangko Sentral ng Pilipinas (BSP).

Data from the central bank showed gross international reserves (GIR) declined by 3% to USD 103.02 billion at the end of January from USD 106.26 billion at the end of December 2024.

Year on year, dollar reserves inched down by 0.2% from USD 103.27 billion.

“The month-on-month decrease in the GIR level reflected mainly the BSP’s net foreign exchange operations, and drawdown on the National Government’s (NG) deposits with the BSP to pay off its foreign currency debt obligations,” the BSP said.

As of end-January, the level of dollar reserves was enough to cover about 3.6 times the country’s short-term external debt based on residual maturity.

It was also equivalent to 7.3 months’ worth of imports of goods and payments of services and primary income.

“By convention, GIR is viewed to be adequate if it can finance at least three-months’ worth of the country’s imports of goods and payments of services and primary income,” the BSP said.

Ample foreign exchange buffers protect an economy from market volatility and ensure the country can pay its debts in the event of an economic downturn.

BSP data showed foreign currency deposits plunged by 46.3% to USD 733.5 million from USD 1.37 billion a month ago. It also fell by 36.9% from USD 1.16 billion in January last year.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the lower foreign exchange holdings was due to the peso volatility in the past months.

The peso closed at P58.365 versus the greenback at end-January, depreciating by 52 centavos from P57.845 at end-December.

“GIR as of end-January declined for the fourth straight month after some net payment of the National Government’s foreign debt maturities and other obligations denominated in US dollars or other foreign currencies,” Mr. Ricafort added.

Meanwhile, the central bank’s foreign investments dropped by 3.7% to USD 86.13 billion as of January from USD 89.48 billion in the previous month. Year on year, investments inched lower by 1.3% from USD 87.28 billion.

Net international reserves went down by 3% to USD 103 billion as of end-January from USD 106.2 billion as of end-December 2024.

Net international reserves are the difference between the BSP’s reserve assets or GIR and reserve liabilities, such as short-term foreign debt and credit and loans from the International Monetary Fund (IMF).

The country’s reserve position in the IMF declined to USD 671.3 million at end-January from USD 675.6 million in the prior month and from USD 753.9 million a year ago.

Special drawing rights — the amount the country can tap from the IMF — was unchanged at USD 3.73 billion for the second straight month.

On the other hand, reserves in the form of gold were valued at USD 11.75 billion. This was up by 6.8% from USD 11 billion as of end-December, and higher by 14% from USD 10.3 billion a year earlier.

For the coming months, Mr. Ricafort said dollar reserves could be supported by growth in overseas Filipino worker remittance, business process outsourcing revenues, exports and tourism revenues.

The government’s global bond offer in January could also be reflected in the February GIR level, he said.

In January, the NG raised USD 3.3 billion from its triple-tranche offering of US dollar and euro bonds. This was its first global bond issuance for the year.

The central bank expects the country’s GIR to hit USD 110 billion by end-2025. — Luisa Maria Jacinta C. Jocson