PH forex reserves fall to $86.4B in January

FOREIGN debt servicing by the national government dragged the country’s gross international reserves ( GIR) to a two- month low of $86.42 billion at the end of January.

The figure — the lowest since November 2019’ s $ 86.22 billion — was also 1.61 percent lower than the figure posted the previous month, but was 4.77 percent higher than the year-ago amount, preliminary data released by the Bangko Sentral ng Pilipinas (BSP) on Friday showed.

In a statement, the central bank said the month-on-month decline reflected “outflows arising from the national government’s foreign exchange withdrawal, which was used mainly to pay its foreign exchange obligations.”

These were partially tempered by the Bangko Sentral’s net foreign exchange purchases from its foreign exchange operations and income from its investments abroad.

In a comment, Security Bank chief economist Robert Dan Roces said latest data meant the GIR buildup in the past year “is paying off, especially from a risk event,” such as the 2019 novel coronavirus acute respiratory disease (2019nCoV ARD) scare.

“Current reserve level still a potent buffer to protect the country from any possible fallout against the [Philippine peso], and lesser linkage with greater China compared with our regional neighbors means the [peso] is more insulated

from [the] negative impact of the [2019-nCoV] epidemic,” he added.

The latest reserve level was enough to cover 7.6 months worth of imports, lower than December 2019’s 7.7 months, but higher than the 7.1 months a year earlier, respectively.

It was also equivalent to 5.3 times the country’s short-term external obligations due within one year and four times based on residual maturity.

Net international reserves, which refer to the difference between GIR and total short-term liabilities, also decreased to $86.42 billion from $87.84 billion a month earlier.

GIR are foreign assets readily available to and controlled by the BSP for the direct financing of payment imbalances, and for managing the magnitude of such imbalances. It consists of holdings of gold, special drawing rights, foreign investments, and foreign exchange, including reserve position in the fund.