THE country’s dollar defenses slightly dipped in September this year, largely due to the national government’s debt servicing dollar requirements and revaluation of gold prices.
The Bangko Sentral ng Pilipinas (BSP) reported on Wednesday that the country’s gross international reserves (GIR) settled at $107.16 billion as of end-September 2021 from the end-August 2021 GIR level of $107.96 billion. It is still, however, higher than the $100.44-billion GIR level recorded in September 2020.
Despite the dip, the BSP said the latest GIR level represents a “more than adequate external liquidity buffer” equivalent to 10.8 months’ worth of imports of goods and payments of services and primary income.
It is also about 7.6 times the country’s short-term external debt based on original maturity and 5.2 times based on residual maturity. “The month-on-month decrease in the GIR level was attributed mainly to the debt service payment of the national government’s [NG] foreign currency debt obligations and downward adjustment in the value of the BSP’s gold holdings due to the decrease in the price of gold in the international market,” the BSP said in a statement.
Data from the BSP showed that the country’s gold holdings hit $8.85 billion in September, down from the $9.155 billion in the previous month. The country’s GIR is the level of foreign exchange holdings being managed by the central bank during a given period.
The GIR is a crucial component of the economy as it is often used to manage the country’s foreign exchange rate against excess volatility.
Just last month, BSP Governor Benjamin Diokno said the country’s strong external position—particularly the country’s strong GIR position—allows the country to manage the impact of shocks, including market reaction over pending move of the US Federal Reserve to normalize its monetary policy.