THE country’s dollar reserves continued to fall in August, hitting the second consecutive month of a below $100-billion gross international reserves (GIR) level for the country for this year.
The Bangko Sentral ng Pilipinas (BSP) reported on Thursday that the country’s GIR hit $99 billion as of end-August this year, from the end-July GIR level of $99.8 billion.
This is the sixth consecutive month of decline for the country’s GIR, starting from a level of $107.7 billion at the start of the year.
The country’s GIR is the level of foreign exchange holdings the Central Bank has during a given period. The GIR 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 8.3 months’ worth of imports of goods and payments of services and primary income.
Moreover, it is also about 7.1 times the country’s short-term external debt based on original maturity and 4.6 times based on residual maturity.
“The month-on-month decrease in the GIR level reflected mainly the National Government’s [NG] foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures, and the downward adjustment in the value of the BSP’s gold holdings due to the decrease in the price of gold in the international market,” the Central Bank said in its statement.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said major catalysts for the country’s GIR in the coming months include the continued inflows of the country’s structural sources of US dollar revenues such as remittances, business process outsourcing (BPO) revenues, Philippine offshore gaming operators (POGO) revenues, foreign tourism receipts and foreign direct investments [FDI].
Ricafort, however, warned that some of these potential dollar inflows would have slowed down amid the Covid-19 pandemic and some headwinds partly due to the continued Russia-Ukraine war, among others.
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