Philippine reserves fall to four-year low of $97.4 billion

The country’s gross international reserves (GIR) fell to $97.4 billion at the end of October from $99.5 billion in September, reaching their lowest level in four years as the Bangko Sentral ng Pilipinas (BSP) sold foreign currency and the national government withdrew funds to meet external debt payments and other financing requirements.

Data from the BSP showed that reserves dropped by $15.9 billion from their peak of $113.3 billion in February 2026 to $97.35 billion in October.

On a monthly basis, the BSP attributed the decrease to its net foreign exchange operations, lower gold prices and foreign currency withdrawals by the national government. The government used funds withdrawn from its deposits with the central bank to pay external debt and meet other financing requirements, while the BSP also recorded downward valuation adjustments, primarily on gold, following a decline in global prices.

RCBC Chief Economist Michael Ricafort attributed the decline to “increased market volatility” stemming from prolonged tensions in the Middle East, as well as the BSP’s efforts to smooth volatility in the local foreign exchange market.

He also pointed to the decline in foreign currency reserves in securities, which fell to $62.8 billion in October from $75.2 billion at the end of February, as part of the broader drop in the country’s reserves.

Ricafort said the lower October GIR level also partly reflected payments for foreign debt and other external obligations, as well as the decline in world gold prices to among their lowest levels in three months.

“The U.S. dollar/peso exchange rate reached a new intraday record high of 64.20 on October 27, 2026, but has since eased to 63.055 as of 6 November 2026, among its lowest levels in three weeks, following signals of reassurance on the peso by President Marcos since October 28, 2026,” he said.

Despite some easing in recent weeks, including the peso's recovery to below P63 per dollar last week, the exchange rate has increased by 9.3 percent since the war in the Middle East started on 28 February.

The BSP has clarified that it does not rely solely on the country's foreign reserves to combat foreign exchange fluctuations, preferring to let market forces dictate the peso and intervening only during extreme volatility.

Despite the decline, the latest reserve level remained sufficient to cover 6.1 months’ worth of imports of goods and payments for services and primary income. The reserves could also cover about 3.1 times the country’s short-term external debt based on residual maturity, the BSP said.

GIR consists of the central bank’s eligible foreign assets, including foreign securities, currency and deposits, its reserve position in the International Monetary Fund, gold, special drawing rights and other reserve assets.