By Katherine K. Chan, Reporter
THE PHILIPPINES’ dollar reserves plummeted to its lowest level in three years at end-September as the central bank used it to support the peso, with foreign debt payments and lower value of gold and foreign-currency assets dragging it further.
In the nine months to September, the country’s gross international reserves (GIR) fell to $99.997 billion, down 8.31% from the $109.06 billion seen a year ago, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.
This was the lowest GIR level in three years or since the $98.116 billion logged in September 2023.
September also marked the seventh straight month that the GIR contracted annually.
Month on month, the country’s dollar reserves declined by 4.62% from $104.846 billion.
In a statement late on Wednesday, the central bank said its reserves shrank largely due to its net foreign exchange operations, especially as the peso depreciated further in September.
The reescalation of the Middle East war, coupled with domestic inflation woes and the US Federal Reserve’s tightening, dragged the peso to hit six new record lows in September.
It plunged to its weakest finish against the greenback at P62.86 on Sept. 14, before slumping to its worst intraday low at P62.925 on Sept. 15, according to Bankers Association of the Philippines data.
As of end-September, the peso has slumped by P3.85 or 6.15% from its P58.79 finish on Dec. 29, 2025.
The BSP uses the country’s foreign reserves by releasing US dollar liquidity when intervening in the foreign exchange market amid episodes of peso depreciation.
The GIR decline was also due to “downward valuation adjustments, primarily driven by changes in the prices of the BSP’s gold holdings and foreign currency-denominated reserve assets.”
It also fell after the National Government (NG) reduced its foreign currency deposits with the BSP to pay its external debts, with its total withdrawals also exceeding its deposits during the month.
International 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).
“While exchange rate developments may have influenced reserve management operations, the decline in reserves cannot be attributed solely to peso weakness based on currently available data,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said via Viber.
He noted that the reserves also fell due to downward valuation adjustments on gold prices and foreign currency reserve assets and the NG’s foreign debt payments during the period.
Preliminary BSP data showed that its gold holdings rose to $17.822 billion in the nine-month period, rising by 8.77% from $16.385 billion a year ago. However, it slipped by 6.73% from $19.109 billion a month earlier.
On the other hand, its foreign currency and deposits plunged by 37.81% to $3.083 billion as of September from $4.958 billion in the previous year but doubled (100.52%) from $1.538 billion at end-August.
Its foreign currency-denominated securities, on the other hand, declined by an annual 16.34% to $64.439 billion as of September from $77.028 billion but grew by 0.62% month on month from $64.043 billion.
The country’s reserve position in the IMF also dipped by 1.98% year on year to $723.1 million from $737.7 million. It also slipped by 0.67% from $728 million a month prior.
Meanwhile, SDRs — or the amount the Philippines can tap from the IMF’s reserve currency basket — fell by 0.27% to $3.931 billion from $3.942 billion as of September 2025 and by 0.67% from $3.958 billion at end-August.
Other reserves soared by 66.36% to $9.998 billion at end-September from $6.01 billion in the same period last year. However, it slumped by 35.37% from the $15.471 billion recorded in the prior month.
Despite falling below $100 billion, the latest dollar reserves level remains ample to protect the country from market volatility and ensure that it can pay its debts in case of an economic downturn, according to the BSP.
“The latest GIR level provides sufficient foreign currency to meet the country’s import needs, service its external debt obligations, and serve as a buffer against external economic shocks,” it said.
Based on the latest data, the end-September reserves could cover about 3.2 times the country’s short-term external debt based on residual maturity.
It likewise translates to 6.3 months’ worth of imports of goods and payments of services and primary income, exceeding the three-month standard.
SM Investments Corp. Group Economist Robert Dan J. Roces also noted that the end-September GIR level, albeit lower, still provides a good buffer, although there may be pressure from a weakening peso.
“The key point is that reserves are lower, but our buffer is not low,” he said in a Viber message. “The decline reflects lower gold valuations and the BSP’s efforts to smooth out peso volatility.”
“We could see further pressure if the peso remains weak, but our reserves are still more than enough to cover several months of imports. So, this is more about managing volatility than worrying about our ability to meet external obligations,” he added.
For Mr. Asuncion, the trajectory of the Philippines’ dollar reserves for the rest of the year will depend on “the balance between foreign exchange operations, external debt payments, valuation movements in reserve assets, and offsetting inflows from exports, remittances, investments, and official foreign borrowings.”
“Overall, while GIR has declined to its lowest level in three years, current reserve adequacy indicators suggest that the country’s external position remains fundamentally sound,” he added.
The BSP projects its foreign reserves to decline to $104 billion this year from the $110.8 billion it held in 2025.
