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GIR drops to $93.95B as of end-Nov.

Five-dollar bills are inspected at the Bureau of Engraving and Printing in Washington, D.C., March 26, 2015. — REUTERS

THE PHILIPPINES’ dollar reserves dipped as of end-November as the National Government paid some of its debt obligations and the Bangko Sentral ng Pilipinas (BSP) continued to defend the peso.

Data released by the BSP on Wednesday evening showed gross international reserves (GIR) stood at $93.95 billion as of end-November, slipping 0.08% from the $94.03 billion as of end-October. 

The dollar reserves declined 12.8% from the $107.72 billion as of end-November 2021.

“The month-on-month decrease in the GIR level reflected mainly the National Government’s (NG) payments of its foreign currency debt obligations and the BSP’s net foreign exchange operations,” the central bank said. 

As of end-November, the dollar reserves were enough to cover 6.9 times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity.

It is also equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income.

Ample foreign exchange buffers protect the country from market volatility and serves as a guarantee for the economy’s ability to pay its debts in the event of an economic downturn.

According to the BSP, net international reserves dipped 0.07% to $93.93 billion as of end-October 2022 from $94 billion a year ago.

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

Broken down, the BSP’s foreign investments stood at $79.29 billion as of end-November, slipping 0.8% from the $79.96 billion a month earlier. This was also 13.4% down from the $91.51 billion a year earlier.

Foreign currency deposits declined by 7.7% to $1.32 billion in November from $1.43 billion in October, and by 47% from the $2.49 billion a year earlier.

Meanwhile, buffers in the form of gold were valued at $8.96 billion, or higher by 8.3% than the $8.27 billion as of end-October, but still lower by 0.4% from the $9 billion a year earlier.

The country’s reserve position in the IMF also rose 2.2% to $755 million from $739 million in the prior month, but dipped by 3.5% from the $782 million as of end-November 2021.      

Special drawing rights (SDRs) — or the amount the country can tap from the IMF — was higher by 0.11% at $3.624 billion from the $3.62 billion in a month prior. However, it was lower by 8.1% from the $3.942 billion a year earlier.

The Philippines received $2.8 billion worth of SDRs from the IMF in August 2019 as part of the latter’s efforts to help countries recover from the coronavirus pandemic.

The BSP is expecting to end the year with $99 billion in dollar reserves, and $100 billion by end-2023.

Year to date, the GIR has declined by 12.8% from the $108.8 billion as of end-2021 due to the weaker peso in recent months, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail note.

The BSP intervenes in the foreign exchange market to smoothen the volatility, especially as the peso slumped to a record low of P59 against the dollar in October. The local unit has since bounced back to the P55-a-dollar level.

“GIR likely to inch higher to close out the year with the peso appreciating sharply,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in a Viber message. “Strong dollar theme fading somewhat with expectations that the Fed would be slowing pace of rate hikes.”

The US Federal Reserve has so far increased rates by 375 basis points from near-zero in March to within 3.75-4%, which was described as the fastest monetary tightening since the early 1980s.

Earlier, Finance Secretary Benjamin E. Diokno said the Philippines has more than enough foreign exchange reserves for a proposed sovereign wealth fund, saying there was “too much ammunition.”

An initial version of the bill proposing the Maharlika Wealth Fund (MWF) had sought to tap state pension funds and the BSP’s foreign exchange buffers as a source of funds.

However, Marikina Rep. Stella Luz A. Quimbo said they are now looking to use the BSP’s profits for the MWF, after a meeting with BSP Governor Felipe M. Medalla on Wednesday.

Ms. Quimbo said the House Committee on Appropriations will meet today (Friday) to discuss how much the BSP will contribute to the fund. — Keisha B. Ta-asan

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