THE trend of the Philippines’s dollar reserves level ‘bears watching,’ an analyst warned, after the country’s buffer against external economic shocks plunged to its lowest level in 18 months.
‘The level of reserves remains comfortable, but the trend bears watching,’ Jonathan L. Ravelas, senior adviser at Reyes Tacandong and Co. said on Friday.
Ravelas said this after data from the Bangko Sentral ng Pilipinas (BSP) showed that the country’s gross international reserves (GIR) plunged to $103.38 billion as of end-July 2026, the lowest level in 1 year and 6 months or since January 2025.
The latest figure is 1.30 percent lower than the $104.74 billion recorded in end-June 2026. Year-on-year, foreign reserves also declined by 2.47 percent from the $106 billion in end-July 2025.
For his part, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corporation (RCBC), attributed the decline in dollar reserves to ‘possible intervention’ in the local foreign exchange market after the US dollar/peso reached a new record low of P61.847 on July 24,2026.
Ricafort said this could also be due to the local currency hovering around the 61.60 to 61.80 levels which he said ‘have been sustained since late April 2026.’
RCBC’s chief economist also noted that the lower dollar reserves as of end-July of this year could be due to the renewed hostilities between the United States and Iran which resumed on July 11,2026.
He said this led to higher US Treasury yields and global bond yields that ‘partly weighed’ on the foreign investments portion of the reserves as well as some payment of foreign debts and other obligations.
According to the central bank, the decrease in reserves was mainly driven by the following: net foreign exchange operations, national government’s (NG) drawdowns on its foreign currency deposits with the BSP for external debt service and NG’s net foreign currency withdrawals from its deposits with the BSP.
These were partly offset, the BSP said, by the following: upward valuation adjustments in the BSP’s gold holdings due to the increase in the price of gold in the international market and the BSP’s net income from its investments abroad.
GIR breakdown
The GIR is made up of these components: eligible foreign assets, including securities, currency and deposits, reserve position in the fund, gold, special drawing rights and other reserve assets, held by the central bank.
On a month on month basis, the components of foreign currency reserves saw the biggest decline compared to other sources of dollar reserves.
BSP data showed currency and deposits plunged to $1.848 billion as of end-July 2026, or 19.20 percent lower than the $2.287 billion recorded as of end-June 2026.
Currency and deposits include time deposits, demand deposits, and cash holdings.
Securities, which BSP said refer to highly liquid and marketable debt securities, declined by 6.63 percent to $67.263 billion, compared to the $72.036 billion as of end-June 2026.
Securities exclude investments under the Asian Bond Fund (ABF) and Bank of International Settlements Investment Pool (BISIP).
In contrast, other reserve assets, SDRs and gold holdings partly offset the decrease in reserves.
Data from the central bank showed gold holdings climbed by 1.72 percent to $17.4895 billion as of end-July 2026 compared to the $17.194 billion as of end-June 2026.
SDRs inched up by 0.54 percent to $3.937 billion as of end-July 2026 from the $3.915 billion as of end-June 2026.
Reserve position in the fund also increased by 0.08 percent to $725.2 million as of end-July 2026, compared to the $724.6 million as of end-June 2026.
Other reserve assets saw a significant 41.08-percent jump to $12.11 billion as of end-July 2026 from the previous month’s $8.59 billion.
Looking ahead, Ravelas emphasized: ‘The key to rebuilding GIR is not intervention or borrowing, but stronger exports, higher investments, more tourism receipts, and sustained remittance growth.’
‘Ultimately, reserve strength follows economic strength,’ added the foreign exchange analyst.
Despite the decline in the country’s foreign reserves, the BSP said 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 end-July GIR level can cover up to 6.7 months’ worth of imports of goods and payments of services and primary income. It can likewise cover about 3.6 times the country’s short-term external debt based on residual maturity,’ the BSP said in its statement.