The Philippines’ gross international reserves (GIR) may have again fallen below the $100-billion mark after three straight months above this threshold to end June at $99.8 billion, mainly due to reduced investments abroad.
Preliminary data at the Bangko Sentral ng Pilipinas (BSP) show that the GIR has been decreasing for two months in a row since registering at $101.8 billion in April.
The tentative tally for June is about $814 million less than the $106.6 recorded at the end of May.
“The month-on-month decrease in the GIR level reflected mainly the national government’s net foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures,” the central bank said in a statement.
Gold holdings
The BSP downward adjustments in the value of its gold holdings, due to the decrease in the price of gold in the international market, was another cause for the GIR’s decrease in June.
At the end of June, BSP’s gold cash was valued at $10.01 billion, down by $197 million from $10.2 billion a month earlier. The GIR first breached the $100-billion mark at $100.4 billion in September 2020 as the global fallout of the COVID-19 pandemic slashed the Philippines’ import bill. This metric peaked at $110.12 billion in December 2020, when it was enough to cover 11.7 months’ worth of imports of goods and payments of services and primary income.
Meanwhile, BSP’s overseas investments were pegged at $84.05 billion, $715 million less than the $84.76 million recorded in May.
US decline
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the decrease in foreign investments was largely due to the decline in the United States and global bond markets following Washington’s enactment of a law that raised the federal government’s debt ceiling and increased the supply of US debt paper.
Ricafort also said the 1.9-percent decrease in the value of gold holdings was consistent with the 2.2-percent decline in world gold prices in June. He added that these two factors were offset by a $100-million or 9.4-percent increase in foreign exchange holdings.
This was pegged at $1.17 billion in June from $1.07 billion in May. INQ
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