THE country’s gross international reserves (GIR) fell below $100 billion in September to a three-year low amid Bangko Sentral ng Pilipinas (BSP) efforts to smooth peso volatility.
Central bank data showed reserves were at $99.996 billion as of end-September, markedly lower than the $104.85 billion and $109.06 billion recorded a month and year earlier.
It was the lowest since September 2023’s $98.12 billion.
The BSP said the decline was due the following:
– its net foreign exchange operations;
– downward valuation adjustments, primarily driven by changes in the prices of BSP gold holdings and foreign currency–denominated reserve assets;
– the government’s drawdowns from foreign currency deposits with the BSP to pay for external debt; and
– the government’s net foreign currency withdrawals from its deposits with the BSP.
Despite the decline, the central bank said the latest GIR level was enough for up to 6.3 months’ worth of imports of goods and payments of services and primary income.
It can also cover about 3.2 times the country’s short-term external debt based on residual maturity, the BSP added.
The central bank said the reserves “provide sufficient foreign currency to meet the country’s import needs, service its external debt obligations, and serve as a buffer against external economic shocks.”
The GIR level is considered adequate if it can finance at least three months’ worth of the country’s imports of goods and payments of services and primary income.
It is also considered sufficient if it provides at least 100-percent cover for the payment of the country’s foreign liabilities, public and private, falling due within the immediate 12-month period.
SM Investment Corp. economist Robert Dan Roces said that the country’s buffer was still sufficient despite the lower GIR.
“The decline reflects lower gold valuations and the BSP’s efforts to smooth out peso volatility,” he said.
“But our reserves are still more than enough to cover several months of imports.”
Philippine Institute for Development Studies senior fellow John Paolo Rivera, meanwhile, said the reserves could remain under pressure from a strong dollar and elevated oil prices.
“But they still provide a comfortable external buffer,” he said.
“[The] key is maintaining reserve adequacy [rather] than defending a particular forex rate.”
The local currency has fallen to record lows amid global uncertainties and remains in P62:$1 territory.
The central bank expects the country’s reserves to end 2026 at $104 billion and rise to $105 billion next year.
