PHL dollar reserves hit $99.72 billion in January

• Published date: 09 February 2023
• Publication title: Business Mirror

The country's international reserves contracted 7.4 percent year-on-year in January, according to data from the Bangko Sentral ng Pilipinas (BSP).

BSP data showed that the country's Gross International Reserves (GIR) declined to $99.72 billion in January 2023 from $107.69 billion in January 2022.

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael Ricafort said this decline may have been caused by the weak peso.

'The year-on-year decline in the GIR somewhat correlated with the relatively weaker peso in earlier months of 2022,' Ricafort said in RCBC's Hexagon Perspective.

In the coming months, Ricafort said the GIR could be driven by Overseas Filipino worker (OFW) remittances, revenues from the business process outsourcing (BPO) sector, higher exports, and foreign tourism revenues.

Other factors include foreign direct investment (FDI) inflows, hot money inflows, proceeds from the proposed US dollar-bond issuances, and foreign borrowings by the national government in the first semester of 2023.

However, Ricafort said these drivers may be offset by the government's plans to reduce foreign borrowings relative to domestic borrowings in the coming months and years to better manage the country's foreign borrowings.

'[GIR growth may be] offset by the still relatively wider trade deficit/net imports compared to recent years and some net foreign debt payments, going forward,' he said.

The BSP said the GIR in January is higher compared to the end-December 2022 level of $96.1 billion.

The BSP said the January 2023 GIR level is 6 times the country's short-term external debt based on original maturity and 4 times based on residual maturity.

The...