The country’s external deficit widened in March while foreign exchange reserves fell to a 12-year low, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP).

In a Tuesday statement, the BSP reported that gross international reserves (GIR) settled at $104.9 billion as of end-April, which the central bank said remains “a robust external liquidity buffer” equivalent to about seven months’ worth of imports.

GIRs are intended to ensure sufficient dollar liquidity to meet the country’s import requirements and foreign debt obligations, address currency volatility, and provide a buffer against external economic shocks.

However, BSP data showed foreign exchange reserves plunged to a 12-year low of $469 million — nearly four times lower than the $1.74 billion recorded at end-March and the lowest level since 2014.

The sharp drop may indicate heavier BSP intervention in defending the local currency, which has fallen to record lows 11 times since the Middle East conflict escalated in March. As of press time, the peso is trading at P61.75 against the US dollar, pressured by the country’s sensitivity to global oil prices and broad global demand for dollars.

BSP Governor Eli M. Remolona Jr. has repeatedly reiterated the central bank’s generally hands-off approach toward the foreign exchange market, preferring to let market forces dictate the peso’s movement while intervening only during periods of excessive volatility.

“We try to dampen the swings and the volatility. But market forces are causing the peso to depreciate over periods of time,” he said previously.

“But some depreciation, I think, is called for. And that’s what the market is trying to do.”

The central bank also flagged the peso’s depreciation — which has weakened by around 7 percent since the end-February close of P57.66 — as one of the drivers behind April inflation, which surged to 7.2 percent amid the first- and second-round effects of the energy crisis.

Meanwhile, the BSP said the country’s balance of payments (BOP) position posted a $2.1-billion deficit in April, bringing the cumulative shortfall for the January-to-April period to $7.4 billion.

The BOP, which measures the country’s transactions with the rest of the world, has come under strain in recent months amid a widening trade gap and volatile capital flows.

Foreign direct investments fell to pandemic-era lows last year, which many analysts partly attributed to weakened investor confidence stemming from governance concerns linked to the flood control scandal. The BSP earlier noted that “rising geopolitical risks are weighing on investor sentiment,” as overseas tensions and tighter global financial conditions continue to affect capital flows.