Philippines’ dollar reserves plunge to 18-month low in July

By Katherine K. Chan, Reporter

The Philippines’ dollar reserves plunged to its lowest level in nearly two years as the central bank used its dollars to support the peso amid renewed volatility last month, the Bangko Sentral ng Pilipinas (BSP) said on Friday.

Preliminary central bank data showed the country held $103.379 billion in gross international reserves (GIR) as of end-July, a level the regulator said “remained adequate.”

However, this reflected a 1.3% dip from the $104.745 billion the prior month, and a 1.93% drop from $105.418 billion a year ago.

This was the lowest GIR level in 18 months or since the $103.271 billion logged in January 2025, and marked the fifth straight month that the GIR level slipped on an annual basis.

In a statement on Friday, the central bank said its reserves shrank mainly due to its net foreign exchange operations, especially as the strong dollar weighed once again on the peso.

In July, reignited conflict in the Middle East jolted markets anew and triggered safe-haven demand for the greenback. This dragged the peso to its new historic low of P61.847 against the dollar on July 24, breaking its previous record of P61.75 on July 23.

Based on BSP data, the local unit continued to average above the P61 handle for a third straight month with P61.5963 per dollar in July.

The central bank also said the country’s GIR fell after the national government withdrew from its foreign currency accounts with the BSP to pay its external debts, with its total withdrawals exceeding its deposits during the month.

However, the decline was partly offset by higher valuations of the BSP’s gold holdings amid elevated global gold prices as well as the central bank’s net income from its foreign investments.

Dollar reserves are the central bank’s foreign assets held mostly as investments in foreign-issued securities, foreign exchange and monetary gold, among others.

These are supplemented by claims to the International Monetary Fund (IMF) in the form of reserve position in the fund and special drawing rights (SDRs).

As of end-July, the BSP’s gold holdings stood at $17.49 billion, rising by 1.72% from $17.194 a month earlier and by 26.89% from $13.783 billion the previous year.

Its reserve position in the IMF also inched up by 0.08% to $725.2 million from $724.6 million at end-June but dropped by 0.52% from $729 million a year ago.

Meanwhile, its SDRs — or the amount the Philippines can tap from the IMF’s reserve currency basket — climbed by 0.56% to $3.937 billion from end-June’s $3.915 billion and by an annual 1.22% from $3.89 billion.

The BSP’s foreign currency and deposits, however, decreased by 19.16% month-on-month to $1.849 billion at end-July from $2.287 billion. Year on year, it saw a sharper decline of 75.4% from $7.516 billion.

Its securities likewise dropped by 6.63% to $67.264 billion from $72.037 billion the prior month and by 7.81% from $72.958 billion in the same period last year.

On the other hand, its other reserve assets amounted to $12.115 billion in July, soaring by 41.08% from $8.587 billion at end-June. It was also nearly double the $6.542 billion seen a year ago.

The central bank noted that its end-July reserves could cover about 3.6 times the country’s short-term external debt based on residual maturity.

It likewise translates to 6.7 months’ worth of imports of goods and payments of services and primary income, exceeding the three-month standard.

“These provide sufficient foreign currency to meet the country’s import needs, service its external debt obligations, and serve as a buffer against external economic shocks,” the BSP said.

The BSP expects its foreign reserves to fall to $104 billion by end-2026 from the $110.8 billion it held last year.