THE Philippines’ gross international reserves (GIR) dropped to their lowest level in 11 months in December and failed to hit the central bank’s forecast for the month, official data showed on Friday.
Analysts expect that this year, rising interest rates in the United States would put further pressure on the country’s foreign exchange reserves.
The GIR level as of the end of December 2016 stood at $81.04 billion, down 0.49 percent from $81.45 billion in November, although up 0.46 percent from $80.66 billion in December 2015, the Bangko Sentral ng Pilipinas (BSP) said in its latest report.
GIR is the sum of a country’s foreign transactions and is composed of its reserve position in the International Monetary Fund, foreign exchange holdings, gold reserves, special drawing rights (SDRs) and foreign investments.
Gross reserves in December were enough to cover 9.2 months’ worth of imports, steady from November’s cover, but were below the 9.9 months’ cover in the year-earlier period, the central bank s aid.
The latest GIR level was also the lowest since the $80.69 billion recorded in January last year.
It also settled below the $83.7 billion forecast of the BSP for 2016.
“The decline in the GIR from November to December was due mainly to outflows arising from payments made by the national government for its maturing foreign exchange obligations, foreign exchange operations of the
BSP, and revaluation adjustments on the BSP’s gold holdings resulting from the decrease in the price of gold on the international market,” the BSP said in a statement issued with the figures.
The outflows were partially offset by the national government’s net foreign currency deposits, along with the BSP’s income from investment abroad, it said.
Measured against foreign debt, the November GIR level is equivalent to 5.8 times the country’s short-term external debt due within one year, and 4.2 times based on residual maturity, the BSP said.
Net international reserves—which refer to the difference between the BSP’s GIR and total short-term liabilities—dropped to $81.03 billion from $81.43 billion.
ING Bank Manila senior economist Joey Cuyegkeng said foreign exchange reserves are likely to come under pressure as investors pull out their funds or raise the US dollar share in their investment portfolios.
“Rising US interest rates increase the attractiveness [of raising]the US dollar portion of an investors’ portfolio and to hedge corporate dollar liabilities or holdings,” he explained.