The country’s foreign currency buffer, or the gross international reserves (GIR), stood at only $74.77 billion in October, Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla Jr. said on Wednesday.
This was $5.64 billion lower compared to the same month last year and similarly down by $144 million from the previous $74.93 billion reported in September.
Likewise, this represents a new a seven-year low from GIR of only $71.9 billion in July 2011.
The currency reserves, a measure of the country’s capacity to pay for maturing foreign loans or finance imports such as oil or even dairy, have steadily diminished since December last year and only briefly broke the pattern in August.
In January this year, the GIR registered at $81.22 billion and was enough to cover for 7.7 months of imports. With the sustained decline, the reserves fell to cover only 6.8 months of imports.
According to the BSP, the steady deterioration of dollar reserves was mainly driven by outflows arising from its foreign exchange operations, payments made by the national government for its forex obligations as well as adjustments in the value of its gold holdings.
The central bank noted, however, that the decline was partially tempered by the revaluation adjustments on the BSP’s gold holdings resulting from the increase in the price of gold in the international market as well as its income from offshore investments.
In addition, the gold holdings of the BSP similarly broke pattern by rising to $7.854 billion after having steadily fallen since May when it stood at $8.196 billion.
“The end-October 2018 level of GIR continues to serve as an ample external liquidity buffer and is equivalent to 6.8 months’ worth of imports of goods and payments of services and primary income,” it said.
“It is also equivalent to 5.7 times the country’s short-term external debt based on original maturity and 3.9 times based on residual maturity,” the BSP added.
Meanwhile, net international reserves, or the difference between the central bank’s GIR and total short-term liabilities, stood at $74.76 billion as of end-October, a $.16 billion downtick from $74.92 billion in September this year.