THE COUNTRY’s foreign exchange reserves dipped in May to a fresh three-year low amid lower gold valuations and as the central bank defended the peso.
Gross international reserves (GIR) slid to $78.968 billion last month from $79.609 billion in end-April and the $82.177-billion level at end-May 2017, the Bangko Sentral ng Pilipinas (BSP) reported on Thursday.
That was the lowest level since November 2014’s $78.679 billion, as the government settled more foreign debts and as lower gold prices in the international market drove down the value of the BSP’s gold holdings to $8.197 billion from April’s $8.251 billion.
The BSP also used the reserves to temper sharp swings in peso-dollar trading as part of its “tactical intervention” to keep the currency competitive. The peso hit P52.70 per dollar in May to mark its weakest level in nearly 12 years.
That, in turn, drove up the BSP’s foreign currency holdings to $5.419 billion from $5.197 billion the previous month and $3.638 billion a year ago.
In contrast, the value of the BSP’s offshore investments — which account for bulk of the reserves — declined to $63.714 billion from $64.519 billion in April.
Reserves parked with the International Monetary Fund (IMF) totalled $419.3 million as of end-May, marking a second straight month of decline from $424 million as of end-April.
Special drawing rights — the amount which the Philippines can tap in the IMF’s reserve currency basket — steadied at $1.218 billion.
The latest GIR level settled below the BSP’s $80-billion forecast for 2018, and end-2017’s actual $81.57 billion. May reserves can cover 7.7 months’ worth of import payments, which the BSP described as an “ample external liquidity buffer” for the economy.
However, this import cover ratio is the lowest since May 2009.
Still, the ratio is well above the three-month global standard.
“I think that we, among our peers in the region, still have one of the healthiest and largest international reserves,” said Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines.
“If you look at the numbers historically, it is actually dwindling and the number is decreasing. However, at 200% more than what is expected, we are still at a better position.”
The GIR level is also enough to settle the country’s short-term external debt by 5.4 times based on original maturity (outstanding external debt with original maturity of up to one year) and 3.9 times when computed in residual terms (outstanding foreign debt falling due within a year plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months).
International reserves are composed of gold, the BSP’s assets expressed in foreign currencies, country quotas with the IMF, and foreign currency deposits held by government and state-run firms. — Melissa Luz T. Lopez

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