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Gross international reserves (GIR), according to an economist, are still substantial despite the fall and continue to support the local currency and the nation’s investment grade status.

According to Michael Ricafort, chief economist at Rizal Commercial Banking Corporation (RCBC), the country’s most recent foreign reserve level is sufficient to cover 7.5 months’ worth of imports and is still significantly higher than the three- to four-month internal minimum criterion.

According to Ricafort, this might still offer further protection for the peso exchange rate from speculative attacks.

“Therefore, still relatively high GIR at USD99.3 billion could still strengthen the country’s external position, which is a key pillar for the country’s continued favorable credit ratings for the second year in a row, mostly at 1-3 notches above the minimum investment grade, a sign of resilience despite the Covid-19 (coronavirus disease 2019) pandemic that led to downgrades in other countries around the world,” he said.

The foreign reserves of the Philippines fell from USD100.7 billion at the end of January 2023 to USD99.31 billion in February, according to a report released on Tuesday by the Bangko Sentral ng Pilipinas (BSP).

This comes after the national government withdrew its deposits with the central bank in order to settle its debts denominated in other currencies, and decreased valuations of the central bank’s gold holdings as a result of the metal’s slide on the global market.

Given the sustained growth of structural inflows including remittances from overseas Filipino workers (OFWs), earnings from the business process outsourcing (BPO) industry, tourism receipts, and foreign investment inflows, Ricafort is confident about the continued resilience of the country’s GDP.

He added that the country’s largest companies and conglomerates’ ongoing increase in fund-raising and other investment banking activities might result in an increase in foreign investment inflows, which could improve the country’s balance of payments (BOP) and gross domestic product (GIR) on a cash flow basis.

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