March dollar reserves highest in nearly 2 years

THE PHILIPPINES’ gross international reserves (GIR) jumped to a near two-year high of $104.03 billion at the end of March, the Bangko Sentral ng Pilipinas (BSP) reported.

Preliminary data from the BSP showed that dollar reserves rose by 2% from $101.99 billion as of end-February. It was also up by 2.4% from P101.55 billion a year ago.

This was the highest GIR level in almost two years or since the $105.4 billion recorded in April 2022.

“The month-on-month increase in the GIR level reflected mainly the National Government’s (NG)  net foreign currency deposits with the BSP, upward valuation adjustments in the value of the BSP’s gold holdings due to the increase in the price of gold in the international market, and net income from the BSP’s investments abroad,” it said in a statement.

As of end-March, the level of dollar reserves was enough to cover about 6.1 times the country’s short-term external debt based on original maturity and 3.7 times based on residual maturity.

It was also equivalent to 7.7 months’ worth of imports of goods and payments of services and primary income.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the rise in dollar reserves was due to higher foreign investments, foreign exchange holdings and an increase in the value of gold holdings.

The central bank’s foreign investments edged higher by 1.7% to $87.91 billion as of end-March from $86.45 billion in the previous month. Year on year, foreign investments went up by 2.9% from $85.4 billion.

Reserves in the form of gold were valued at $10.53 billion. This was 1.9% higher than $10.34 billion as of end-February and 4.5% higher than $10.07 billion as of end-March 2023.

Meanwhile, foreign currency deposits surged by 58% to $1.07 billion from $677.8 million a month earlier. However, it declined by 27% from $1.47 billion in the year-ago period.    

“The National Government’s planned global bonds as early as the second quarter 2024 would also be added to the country’s balance of payments and GIR data,” Mr. Ricafort added.

Finance Secretary Ralph G. Recto has said that the Bureau of the Treasury (BTr) is finalizing the details of its first global bond offering this year. The BTr has yet to release details on this.

This year, the government is planning to borrow P2.46 trillion, of which P606.85 billion is expected to come from foreign sources.

Meanwhile, BSP data showed net international reserves stood at $103.8 billion as of end-March, up by 1.8% from $102 billion in the previous month.

Net international reserves are the difference between the BSP’s reserve assets or GIR and reserve liabilities, such as short-term foreign debt and credit and loans from the International Monetary Fund (IMF).

The country’s reserve position in the IMF decreased by 1.5% to $741.3 million from $752.5 million at end-February. It also dropped by 8.3% from $808.3 million a year ago.

Special drawing rights — the amount the country can tap from the IMF — was unchanged at $3.778 billion for the second straight month.

“For the coming months, the country’s GIR could still be supported by the continued growth in the country’s structural inflows from overseas Filipino workers (OFW) remittances, business process outsourcing (BPO) revenues, exports, (and) relatively fast recovery in foreign tourism revenues,” Mr. Ricafort added.

This year, the BSP projects the GIR level to settle at $103 billion. — Luisa Maria Jacinta C. Jocson