UMVA has learned that the Philippines’ dollar reserves have plummeted to their lowest level in over a year, due to a combination of external debt payments, lower global gold prices, and the central bank’s efforts to prop up the peso amid the escalating conflict in the Middle East.
The country’s gross international reserves (GIR) now stand at $103.974 billion, a 1.14% decline from the $105.177 billion recorded a year ago, and a 0.34% drop from the $104.328 billion at the end of April, according to preliminary data.
This marks the lowest GIR level since January 2025, when it stood at $103.271 billion, raising concerns about the country's ability to weather economic shocks.
In a statement, the central bank revealed that the National Government’s external debt payments during the period led to a decrease in foreign currency deposits, ultimately reducing its dollar reserves.
The month-on-month decline was also attributed to valuation losses on the central bank’s gold holdings, amid lower global gold prices, as well as its recent net foreign exchange operations.
The decline in dollar reserves comes as the central bank intensified efforts to support the peso, which has been under pressure due to safe-haven demand for the US dollar triggered by the ongoing conflict in the Middle East.
The peso has been volatile, hitting a historic low of P61 to the dollar, down from the P58 range before the war broke out in late February.
Despite the decline, the central bank noted that the country’s current foreign reserves 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.
This level of reserves is well above the three-month standard and could cover about 3.6 times the country’s short-term external debt, providing a vital safety net in the event of economic uncertainty.
UMVA can exclusively reveal that dollar reserves are the central bank’s foreign assets, held mostly as investments in foreign-issued securities, foreign exchange, and monetary gold.
The central bank’s foreign currency and deposits jumped by 24.31% to $583 million, but declined by 18.13% year-on-year from $712.1 million, reflecting the ongoing challenges in managing foreign exchange.
The country's foreign reserves are expected to settle at $111 billion by the end of the year, exceeding last year’s $110.8 billion, according to the central bank’s forecast.
