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The Philippines’ stock of foreign currency might reach new record levels in the coming months even as it decreased for the fourth month in a row to settle at $103.53 billion at the end of May.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said in a commentary the latest level of gross international reserves (GIR)—which peaked at $110.12 billion in December 2020—was the lowest in 20 months or since September 2020.
According to the Bangko Sentral ng Pilipinas (BSP), the latest month-on-month decrease in the GIR level reflected mainly the national government’s foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenses.
Another reason was the decrease in the price of gold in the international market, which resulted in a downward adjustment in the value of the BSP’s gold holdings.
“For the coming months, the country’s GIR could still increase and potentially post new record highs, especially after the May 2022 election month that could have temporarily slowed down some investment banking and other fund raising activities by both the government and the private sector,” Ricafort said.
He added that the GIR could rise amid continued growth in foreign currency inflows from overseas Filipinos, business process outsourcing, while foreign tourism has resumed since February as well as foreign direct investment inflows.
Ricafort noted that, except for tourism, these sources of inflows have recently seen record highs or return to prepandemic highs, and are considered bright spots for the Philippine economy. INQ
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