MANILA, Philippines — The country’s foreign exchange reserves narrowed to $81.35 billion as of end-September, $380 million lower than the revised $81.73 billion as of end-August due to the continued weakening of the peso against the dollar, the Bangko Sentral ng Pilipinas reported yesterday.
BSP officer-in-charge Maria Almasara Cyd Tuaño-Amador attributed the month-on-month decline to outflows arising from the revaluation adjustments on the central bank’s gold holdings resulting from the decrease in the price of gold in the international market.
Data showed the BSP’s gold holdings declined 4.3 percent to $8.06 billion in September from $8.43 billion in August.
Tuaño-Amador also cited the payment made by the national government for its maturing foreign exchange obligations as well as the central bank’s foreign exchange operations.
The peso has emerged as the worst performing currency in Asia, depreciating by more than two percent against the dollar due to rising geopolitical tension between the US and North Korea, the normalization path taken by the US Federal Reserve, the country’s expected current account deficit arising from strong imports, among others.
However, Tuaño-Amador pointed out the decline was cushioned by net foreign currency deposits by the national government as well as the BSP’s investments abroad.
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The GIR is the sum of all foreign exchange flowing into the country. The reserves serve as buffer to ensure that the Philippines would not run out of foreign exchange that it could use to pay for imported goods and services, or maturing obligations in case of external shocks.
If it deems necessary, the BSP buys dollars from the foreign exchange market to prevent sharp depreciation of the peso. It can also sell to avoid sharp appreciation of the local currency.
Tuaño-Amador said the end-September GIR level could cover 8.5 months’ worth of imports of goods and payments of services and income.
The buffer, she said, is equivalent to 5.5 times the country’s short-term external debt based on original maturity and 3.6 times based on residual maturity.
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