THE country’s gross international reserves (GIR) posted a new three-year low in May, with the Bangko Sentral ng Pilipinas (BSP) attributing the drop to its foreign exchange operations, government debt payments and lower gold prices.
Central bank data released on Thursday showed the Philippines’ foreign exchange reserves at $78.96 billion, down 0.80 percent from April and also lower compared to the $82.17 billion recorded a year earlier.
May’s reserve level was the lowest since November’s 2014’s $78.67 billion.
The month-on-month decline was due “mainly to outflows arising from the foreign exchange operations of the BSP, payments made by the national government for its maturing foreign exchange obligations, and revaluation adjustments on the BSP’s gold holdings, resulting from the decrease in the price of gold in the international market,” the Bangko Sentral said in a statement.
These were partially tempered by the government’s net foreign currency deposits and central bank income from investments abroad.
The BSP said the latest reserve level was enough to cover 7.7 months worth of imports — lower compared to April’s import cover of 7.8 months and the 8.6 months recorded year earlier — and was also equivalent to 5.4 times the country’s short-term external obligations due within one year and 3.9 times based on residual maturity.
Net international reserves, which refer to the difference between GIR and total short-term liabilities, decreased to $78.95 billion compared to the end-April level of $79.59 billion.
Commenting on the data, Security Bank Corp. economist and Assistant Vice-President Angelo Taningco said the result was “not worrisome” as the GIR level was more than adequate to meet the Philippines’ import requirements and external-debt obligations.
“However, GIR’s monthly drop implies that the country’s balance of payments would likely again be in a deficit position, and this could stoke depreciation pressures on the peso,” he said.
The peso is currently trading above the P52:$1 level, its weakest in almost 12 years. The currency closed at P53.49 to the dollar on Thursday, down from P52.385:$1 a day earlier.
The country’s payments balance deficit, meanwhile, widened to $270 million in April, larger than March’s $266-million shortfall and also a reversal from the $917-million surplus posted a year earlier.
April’s result brought the country’s four-month BoP position to a $1.497-billion deficit, substantially wider than the $78 million recorded in the same period last year. It is the biggest year-to-date shortfall since the $1.780 billion recorded in November last year.