Philippines’ dollar reserves slump to 16-month low at end-May

THE Philippines’ dollar reserves declined to its lowest level in over a year due to external debt payments, lower global gold prices and the central bank’s efforts to support the peso amid the Middle East war, the Bangko Sentral ng Pilipinas (BSP) said.

The country’s gross international reserves (GIR) stood at $103.974 billion at end-May, down 1.14% from the $105.177 billion it held a year ago, preliminary BSP data showed.

Month on month, it fell by 0.34% from the $104.328 billion at end-April.

This was the lowest GIR level seen since January 2025, when it stood at $103.271 billion.

In a statement released late on Friday, the central bank said the National Government had external debt payments due during the period, which led to fewer foreign currency deposits and reduced its dollar reserves.

The month on month decline also reflected valuation losses on the BSP’s gold holdings amid lower global gold prices, as well as its recent net foreign exchange operations, it added.

The decline in dollar reserves comes as the central bank said it moved to support the peso amid volatility triggered by the ongoing Middle East war.

This came as safe-haven demand for the greenback dragged the peso to a new historic low level of P61 to the dollar from the P58 range before the war broke out in late February.

On May 29, the peso lost 10.50 centavos to finish at P61.59 versus the dollar from its P61.485 close on April 30. It sank to a record low of P61.75 on May 18 and 19. 

Still, the BSP noted that the country’s current foreign reserves level continues to provide a “robust external liquidity buffer.”

“Despite the decline, this level still provides a robust external liquidity buffer, equivalent to 6.9 months’ worth of imports of goods and payments of services and primary income,” it added. 

This stands well above the three-month standard and could still cover about 3.6 times the country’s short-term external debt based on residual maturity.

Dollar reserves are the central bank’s foreign assets held mostly as investments in foreign-issued securities, foreign exchange and monetary gold, among others.

These are supplemented by claims to the International Monetary Fund (IMF) in the form of reserve position in the fund and special drawing rights (SDRs).

Based on BSP data, its foreign currency and deposits jumped by 24.31% to $583 million from $469 million at end-April but declined by 18.13% year on year from $712.1 million.

Meanwhile, the BSP’s foreign investments dipped by 0.19% to $79.247 billion at end-May from $79.395 billion a month prior and by 7.99% from $86.128 billion in the same period last year.

Its gold holdings also slid by 1.51% to $19.48 billion from $19.78 billion as of end-April. Annually, it climbed by 41.93% from $13.725 billion a year ago.

The Philippines’ reserve position in the IMF stood at $712.2 million as of May, lower by 1.58% from the $723.6 million recorded at end-April and by 0.5% from $715.8 million a year earlier.

Meanwhile, the country’s SDRs — or the amount the Philippines can tap from the IMF’s reserve currency basket — slid to $3.952 billion at end-May, down 0.24% from $3.961 billion in the previous month. Year on year, it increased by 1.46% from $3.895 billion.

Ample foreign exchange buffers protect the country from market volatility and ensure that it is capable of paying its debts in the event of an economic downturn.

By the end of this year, the BSP expects the country’s foreign reserves to settle at $111 billion, exceeding last year’s $110.8 billion. — Katherine K. Chan