By means of Luisa Maria Jacinta C. Jocson, Reporter
The dollar reserves of the Philippines rose to $ 106.65 billion from the end of February, according to the Bangko Sentral NG Pilipinas (BSP).
Provisional data from the Central Bank showed the gross international reserves (GIR) with 3.3% month after a month of $ 103.27 billion from the end-Januari.
This was also 4.6% higher than $ 101.99 billion in the same period a year ago.
The dollar reserves were also the highest in three months or since the $ 108.49 billion posted in November.
Sufficient currency chubs protect the country against market volatility and ensure that it is able to pay its debts in the case of an economic decline.
“The increase of the month on the month in the GIR level mainly reflected the net deposits of the National Government (NG) with the BSP, including proceeds from the issue of the Republic of the Philippines Global bonds, “said the central bank.
In January, the NG $ 3.3 billion collected from the sale of 10-year-old and 25-year-old fixed rate global bonds and seven-year-old euro sustainability bonds. It was the first global bond box from NG for the year.
BSP data showed that the level of dollar reserves from the end Februari is sufficient to cover approximately 3.8 times the external debt of the country based on the remaining duration.
It is also equal to 7.5 months on the import of goods and payments of services and primary income.
The rise in the dollar reserves was also due to the “Opwaartse Valuation Adjustments in the Golden Interests of the BSP because of the rise in gold price on the international market and the net income from the investments of the BSP abroad.”
The value of the golden participations of the central bank fell by 2.5% to $ 12.5 billion against the final Februari of $ 11.75 billion a month ago. It also jumped with 16.6% of $ 10.34 billion in the same period in 2024.
Foreign investments was $ 89.41 billion from the end Februari, an increase of 3.5% of $ 86.37 billion from the end-Januari and by 3.4% of $ 86.45 billion a year earlier.
In the meantime, the net international reserves rose by 3.3% to $ 106.6 billion out of $ 103.2 billion from the end of the January.
Net international reserves refer to the difference between the reserve activa of the BSP (GIR) and reserve obligations, including short foreign debts, and credit and loans from the International Monetary Fund (IMF).
The reserve activa of the BSP also include foreign investments, foreign exchange, reserve position in the IMF and Special Drawing Rights (SDR).
Reserves with the IMF fell by 0.2% to $ 670.2 million from the end-Februari of $ 671.3 million a month earlier. It also fell by 10.9% of $ 752.5 million in the period from a year ago.
SDRs – or the amount that the Philippines can tap at the reserve greenhouse basket of the IMF – was higher by 0.2% to $ 3.74 billion of $ 3.73 billion in the previous month. Year after year it fell by 1.1% to $ 3.78 billion.
“The increase in GIR reflects strong external buffers, which are crucial for protecting the economy against external shocks,” said Senior Research Fellow John Paolo R. Rivera of the Philippine Institute for Development Studies.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the rise of Gir was due to the latest global issue of the NG and continuous profit in golden property.
“Golden companies continued to improve, largely reflective and consistent with the monthly profit of 2.1% in world gold prices, which again placed new record highs, recently partly due to a flight to safe ports such as gold in the midst of the recent global market volatility,” he said.
Mr. Ricafort also noticed on the increase in foreign investments in the midst of profit in the prices of American treasuries in February.
“The Benchmark 10-year-old US Treasury yield has already been demolished to 4.3%, one of the lowest in three months,” he added.
For the coming months, Mr. Ricafort said that the GIR could be supported by the continuous growth of the overseas Filipino employee (OFW), business process (BPO) income, export and faster recovery in foreign tourist income.
“From or over, they are also expected to remain resilient, which will strengthen reserves. BPO and tourism can generate currency flows that can strengthen GIR, “Mr Rivera added.
Oikonomia Advisory and Research, Inc. Economist Reinielle Matt M. Ereece also said that the GIR will be powered by “Strong OFW transfers, foreign investments, a weak peso and trade change.”
This year the BSP expects a GIR level of $ 110 billion.
Mr Rivera said that the prediction of the central bank for dollar reserves is feasible this year, although this would depend on the intervention of the BSP in the FX market.
“A depreciation of PESO can lead to higher import costs, which increases the demand for the US dollar that can put pressure on reserves. However, a weaker peso also benefits dollar-earning sectors that can compensate for part of the risks, “said Mr Rivera.
“A higher import account as a result of infrastructure projects and rising oil prices can increase the shortage, which means that the BSP must use reserves to stabilize the peso,” he added.
The Peso closed on P57.206 per dollar on Friday and strengthened with 11.4 centavos of its P57.32 finish on Thursday. This was the best finish of the PESO in almost five months or since its P57,205-per-dollar on October 11, 2024.
“A weak peso is not necessarily disadvantageous, because the export makes international markets more competitive. Higher export means more inflow of dollars, “said Mr. Eeece.
“Add the current trade conflict between large producers, which can be a chance for the Philippines to be an alternative trading partner for other countries.”