GIR falls to $101.98 billion in June, a 22-month low

People on their way to work pass by the Bangko Sentral ng Pilipinas building in Pasay City in this file photo.

THE country’s dollar stockpile fell to its lowest in almost two years in June, data from the Bangko Sentral ng Pilipinas (BSP) showed, as it was used to pay foreign currency debts of the National Government (NG) and has been affected by the revaluation of gold in the international market.

The BSP reported on Thursday that the country’s gross international reserves (GIR) declined to $101.98 billion as of end-June 2022 from the end-May 2022 GIR level of $103.65 billion. It is also lower than the $105.76 billion seen in the same month last year.

This is the fourth consecutive month that the country’s GIR has fallen. It is also the lowest level of GIR for the country since September 2020.

The country’s GIR is the level of foreign exchange holdings the Central Bank has during a given period. It is a crucial component of the economy as it is often used to manage the country’s foreign exchange rate against excess volatility.

Despite the decline, the BSP said the current GIR level represents a “more than adequate external liquidity buffer” equivalent to 8.5 months’ worth of imports of goods and payments of services and primary income.

It is also about 7.3 times the country’s short-term external debt based on original maturity and 4.6 times based on residual maturity.

Broken down, the bulk of the decline in the country came from lower foreign investments during the month.

Foreign investments managed by the BSP under the GIR fell from $87.95 billion in May to $85.66 billion in June. This still makes up for most of the GIR during the month.

Gold holdings, meanwhile, also fell from $9.03 billion in May to $8.9 billion in June.

According to Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort, the level of GIR of the country could be influenced by a number of factors in the coming months.

This includes the level of inflows of the country’s structural sources of US dollar revenues such as remittances and business process outsourcing (BPO) revenues, foreign borrowings and the overall economy.

“Still, [the] relatively high GIR may still bolster the country’s external position, which in turn, fundamentally supports the country’s favorable credit ratings as seen recently,” Ricafort said.

Image credits: Nonie Reyes


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