Dollar reserves rise to $107.98B as of end-Feb.
By Luz Wendy T. Noble, Reporter
THE PHILIPPINES’ gross international reserves (GIR) edged higher as of end-February amid the higher valuation of the central bank’s gold reserves.
Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) showed the GIR increased by 0.26% to $107.98 billion last month from the $107.69 billion seen as of end-January. It also went up by 2.68% from the $105.161 billion a year ago.
“The month-on-month increase in the GIR level reflected mainly the upward adjustment in the value of the BSP’s gold holdings due to the increase in the price of gold in the international market and the BSP’s net income from its investments abroad,” the BSP said in a statement on Tuesday.
The level of dollar reserves as of end-February is enough to cover about 8.4 times the country’s short-term external debt based on original maturity and 5.8 times based on residual maturity.
It is also equivalent to 10.2 months’ worth of imports of goods and payments of services and primary income.
Ample foreign exchange buffers protect an economy from market volatility and ensure the country is able to pay its debts in the event of an economic downturn.
“The GIR would help strengthen the country’s external position and, in turn, fundamentally support the country’s credit ratings,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Broken down, reserves in the form of gold were valued at $9.585 billion as of end-February, 4.4% higher than the $9.181 billion as of end-January and up 4.5% from the $9.17-billion level a year earlier.
Mr. Ricafort said global prices of gold may continue to appreciate as investors rush to safe-haven assets due to the ongoing Russia-Ukraine war.
The central bank’s foreign investments amounted to $93.107 billion, up by 0.18% from the $92.939 billion in the previous month and by 2.7% from the $90.679 billion in February 2021.
Meanwhile, foreign currency deposits dropped by a third to $554.4 million from $831.7 million a month earlier and by 83% from the $3.266-billion level a year ago.
The country’s reserve position in the International Monetary Fund (IMF) slipped by 0.14% to $798.9 million as of end-February from $800.7 million in the prior month and by 1.7% from the $812.5 million last year.
Special drawing rights — or the amount the country can tap from the IMF — was steady at $3.934 billion for the second straight month. It was more than three times the $1.232 billion as of end-January 2021.
Mr. Ricafort said ample foreign exchange buffers will be crucial for the Philippines amid heightened volatility in the markets due to the Russia-Ukraine war.
“High GIR provides greater cushion versus any further increase in the country’s import bill and widening of the country’s trade deficit, which could happen due to the sharp increase in the prices of imported oil and global commodities largely due to Russia’s invasion in Ukraine,” he said.
Oil prices have reached multi-year highs in recent days due to concerns over oil supply, with Russia being the second-biggest exporter of crude.
The BSP projects the GIR to reach $112 billion by the end of 2022.
