THE COUNTRY’s dollar reserves slipped in January as the central bank tapped these funds to smoothen exchange rate swings and as the government settled more debts, the Bangko Sentral ng Pilipinas (BSP) said.

Gross international reserves (GIR) reached $81.206 billion last month to post a slight decline from December’s $81.57 billion and the $81.376 billion recorded in January 2017, the BSP announced late Wednesday.

The figure is the smallest since November’s $80.31-billion tally, but is still bigger than the $80-billion GIR level expected by the central bank for the entire year.

International reserves are composed of gold, central bank assets expressed in foreign currencies, country quotas with the IMF, and foreign currency deposits held by government and state-run firms.

In a statement, BSP Governor Nestor A. Espenilla, Jr. attributed the decline in reserves to its foreign exchange operations, as well as debt payments made by the national government for its foreign obligations.

The central bank sometimes uses reserves to influence in the daily peso-dollar trading by buying or selling more units in order to temper sharp movements in the exchange rate. This forms part with the BSP’s “tactical intervention” to temper sharp currency swings.

A steady stream of investment income from abroad as well as dollar deposits held by the government partially offset declines in other reserve components, the central bank said.

Foreign investments accounted for the bulk of the GIR at $65.363 billion, even as it dipped from $65.815 billion in December and $68.366 billion in January last year.

The central bank’s foreign exchange holdings also slipped to $5.701 billion, coming from the $5.783 billion the previous month. This, however, surged from the $3.772-billion level recorded in January 2017.

BSP officials have said that a weaker peso spelled trading gains for the central bank, as the regulator remains long on dollars.

The peso averaged P50.5087 against the greenback last month, coming from a P50.3947 average in December.

Higher gold prices in the international market also propped up reserves, with the value of the BSP’s holdings rising to $8.501 billion from December’s $8.337 billion and January 2017’s $7.642 billion.

Funds kept with the International Monetary Fund (IMF) increased to $430.5 million in January from $424.4 million the previous month, even as they were down from the $446.3 million logged in January last year.

Special drawing rights — the amount which the Philippines can tap in the IMF’s reserve currency basket — steadied at $1.211 billion.

The IMF uses the US dollar, the Japanese yen, the euro, the British pound and the Chinese yuan in computing each country’s reserve position.

January’s GIR can cover up to 8.2 months worth of import duties, well above the three-month global standard. It can also settle 5.8 times the country’s outstanding external debt falling due in up to a year and up to 4.2 times of such liability when computed on “residual maturity” — or such short-term debt plus principal payments on medium- and long-term loans of public and private sectors falling due within the next 12 months.

The central bank described the latest GIR as a “more than ample liquidity buffer” for the economy.

International debt watchers and multilateral lenders have said that these reserves are a source of credit strength, as it lends resilience to external shocks. — Melissa Luz T. Lopez

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