Dollar reserves hit $100 billion as of end-March

THE PHILIPPINES’ dollar reserves increased to $100.2 billion as of end-March, reflecting the government’s foreign currency deposits with the central bank and higher prices of gold.  

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed gross international reserves (GIR) inched up by 2% as of March from the $98.2 billion seen at end-February.   

However, the end-March level was lower by 6.6% than the $107.31 billion a year ago. 

“The month-on-month increase in the GIR level reflected mainly the National Government’s (NG) net foreign currency deposits with the BSP, the upward revaluation of the BSP’s gold holdings due to the increase in the price of gold in the international market, and net income from the BSP’s investments abroad,” the central bank said. 

Based on BSP data, the value of gold reserves rose by 7.9% to $10.07 billion as of end-March from $9.33 billion as of end-February. This is also 7.1% higher than the $9.4-billion level a year earlier.   

Foreign currency deposits meanwhile more than doubled to $1.44 billion from $520.5 million as of February. Year on year, it declined by 18.6% from $1.77 billion a year ago.   

The end-March GIR level was enough to cover the 7.5 months’ worth of the country’s imports of goods and payments of services and primary income.   

It was also equivalent to about six times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity.   

Ample foreign exchange buffers protect the country from market volatility and ensure the country is capable of paying its debts in the event of an economic downturn. The country’s GIR reached $96 billion at end-2022.   

The country’s GIR picked up in March after the sustained increase of US dollar inflows such as remittances, business process outsourcing (BPO) revenues, and lower global oil and non-oil commodity prices in recent months, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.   

According to the BSP, net international reserves increased by 2% to $100.2 billion as of end-March from $98.2 billion in February.    

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

Broken down, the country’s reserve position in the IMF inched up 2.9% to $808.2 million from $785.7 million a month earlier. It also increased 2.3% from the $790 million a year ago.   

Special drawing rights — or the amount the country can tap from the IMF — was unchanged at $3.75 billion for the second straight month. It slipped by 3.6% from the $3.89 billion as of end-March 2022.   

On the other hand, gains from the BSP’s investments abroad inched up by 0.4% to $84.14 billion from $83.83 billion a month earlier, but was 8% lower from $91.46 billion a year ago.   

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said the country’s dollar reserve remained at ample levels despite concerns about its depletion.  

“Despite running a current account deficit, GIR remains relatively stable and should be able to service short term dollar requirements of the economy,” Mr. Mapa said.   

According to central bank data, the current account deficit was at $17.8 billion last year, higher than the $5.9-billion shortfall seen in 2021, amid a wider trade in goods deficit.  

The BSP sees the current account deficit to end the year at $17.1-billion.  

“For the coming months, the country’s GIR could still be supported by the continued growth in the country’s structural inflows from remittances, BPO revenues, exports (though offset by imports), relatively fast recovery in foreign tourism revenues,” Mr. Ricafort said.    

He said that still relatively high GIR at $100.2 billion could strengthen the country’s external position, which is a key pillar of the Philippines’ favorable credit rating.  

The BSP expects the country’s GIR level to reach $93 billion by yearend and $102 billion by end-2024. – Keisha B. Ta-asan