PHL dollar reserves slip to $106B at end-March

By Luisa Maria Jacinta C. Jocson, Senior Reporter

THE PHILIPPINES’ dollar reserves slipped as of end-March as the National Government  repaid more of its foreign debt, preliminary data from the central bank showed.

Bangko Sentral ng Pilipinas (BSP) data showed gross international reserves (GIR) dipped by 1.1% to $106.2 billion as of end-March from $107.4 billion as of end-February.

Year on year, dollar reserves went up by 2.1% from $104.1 billion.

Ample foreign exchange buffers protect the country from market volatility and ensure that it is capable of paying its debts in the event of an economic downturn.

“The month-on-month decrease in the GIR level reflected mainly the drawdowns by the National Government on its foreign currency deposits with the BSP to meet its external debt obligations and the BSP’s net foreign exchange operations.”

Latest data from the central bank showed the Philippines’ outstanding external debt rose by nearly 10% to $137.63 billion as of end-December 2024 from $125.39 billion a year prior.

This brought the external debt service burden to $17.16 billion in 2024, surging by 15.6% from $14.85 billion in 2023.

Despite the slightly lower GIR in March, the BSP said the reserves still act as a “robust external liquidity buffer.”

The level of dollar reserves as of end-March was enough to cover about 3.7 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.

BSP data showed foreign investments stood at $88.6 billion as of end-March, down by 1.7% from $90.1 billion in the previous month. Year on year, it inched up by 0.7% from $87.9 billion.

Meanwhile, net international reserves decreased by 1.1% to $106.2 billion as of end-March from $107.4 billion as of end-February. 

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

The BSP’s reserve assets also include foreign investments, foreign exchange, reserve position in the IMF and special drawing rights (SDR).

Reserves with the IMF declined by 2.6% month on month to $653 million from $670.2 million. It also fell by 12% from $741.3 million a year ago.

SDRs remained steady at $3.75 billion at end-March, the same as the month prior. SDRs are the amount which the Philippines can tap from the IMF’s reserve currency basket.

On the other hand, the value of the central bank’s gold holdings rose by 5.9% to $12.76 billion from $12 billion at end-February. Year on year, it climbed by 21.2% from $10.5 billion.

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said the dip in GIR as of end-March is due to a “combination of valuation adjustments and forex operations.”

“The BSP may have intervened in the FX (foreign exchange) market to smooth out volatility or temper excessive peso depreciation in March. Any dollar selling to stabilize the peso would naturally reduce reserves,” he said.

The peso closed at P57.21 against the greenback at end-March, strengthening by 78.5 centavos from the P57.995 at end-February.

“Hence, we have a pretty stable forex rate hovering around P56-P58 in the past few days,” Mr. Rivera added.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said foreign investments declined as markets were anticipating US trade policies.

Markets were in jitters in the weeks leading up to US President Donald J. Trump’s tariff announcement on April 2.

“The continued Trump factor led to some market volatility, especially on the US stock markets and other risky asset classes, though offset by some shift to safe havens such as US Treasuries that led to lower bond yields recently,” Mr. Ricafort said.

Mr. Ricafort also noted that the increase in gold holdings could be due to the flight to safe-haven reserves amid trade volatility.

“Despite the decrease, the GIR level remains very comfortable… and still provides a strong buffer against external shocks,” Mr. Rivera said.

“The dip is not alarming but rather part of routine fluctuations tied to market and debt management operations,” he added.

The BSP is expecting a GIR level of $105 billion for this year.