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GIR drops to 4-month low

THE country’s foreign-exchange reserves slipped anew in September due to declines in the central bank’s gold and other foreign-currency- denominated holdings, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.

The country’s gross international reserves (GIR) as of end-September totaled only $80.43 billion, which was lower by $440 million from the previous month’s $80.87 billion. This also represented a $3.07-billion drop from $83.507 billion in the same month last year.

This was the country’s lowest hoard of foreign-currency holdings in four months.

Across GIR components, the largest decline was seen in the central bank’s gold holding, as revaluation adjustments due to the lower value of gold during the period pulled the BSP’s gold reserves to $7.57 billion, from $8.05 billion the previous month. This represented a loss of some $471.3 million in just a month.

The country’s foreign-currency denominated investments also incurred outflows totaling $70.08 billion in August to only $69.76 billion in September, or $322 million lower.

Payments for maturing obligations of the national government were also a factor contributing to lower foreign-currency reserves for the period, the BSP said.

The central bank also said the decline could have been larger if not for inflows from the foreign-exchange operations of the BSP during the month, the net foreign-currency deposits by the Treasurer of the Philippines and income from the BSP’s investments abroad.

Given the diminution of the reserves, the central bank said the GIR remains “ample” for its purpose as external sector buffer.

In particular, the GIR can cover 10.9 months’ worth of imports of goods, and payments of services
and income.

This is also equivalent to 8.4 times the country’s short-term external debt based on original maturity, or 6.1 times based on residual maturity.

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