Dollar reserves hit 8-month low as external pressures mount

Buffer still covers 7.1 months of imports, but falling investments and gold prices weigh on reserves.

The country’s dollar reserves slipped to $107.51 billion (around ₱6.0 trillion) by end-March, down 5.08% from the previous month and the lowest level in eight months.

The Bangko Sentral ng Pilipinas (BSP) said the buffer remains intact, with reserves still enough to cover 7.1 months of imports and nearly four times the country’s short-term external debt. This level of reserves is still considered adequate to support external payments and help manage currency volatility.

Still, the decline points to growing external pressure. Foreign investments dropped by $3.3 billion (about ₱184 billion) as global markets reacted to tensions in the Middle East, while gold holdings fell 12.5% to $20.2 billion (around ₱1.1 trillion) as prices slid in March.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the latest GIR level is the lowest since August last year, when reserves stood at $107.1 billion. He attributed the drop mainly to weaker foreign investment flows and declining gold prices during the month.

A smaller reserve cushion means less room to steady the peso during shocks. That raises the risk of higher import costs, especially for fuel and raw materials, which can quickly feed into operating expenses and consumer prices.

The latest figures also reflect softer import cover, with the current level equivalent to 7.1 months, down from the previous month and the lowest in eight months. While still within a comfortable range, the trend suggests the buffer is gradually thinning.

Ricafort said the direction of reserves in the coming months will largely depend on global conditions, particularly movements in gold prices and any easing of geopolitical tensions. He noted that a sustained de-escalation in the Middle East conflict, along with improving market sentiment, could help stabilize reserve levels.

For now, the Philippines retains a solid external position, but the recent decline shows how quickly global developments can filter through to the country’s financial buffers.

 

 

The national buffer is thinning. With dollar reserves hitting their lowest point since August, discover how Middle East tensions and sliding gold prices are putting the squeeze on the Philippines’ financial safety net in 2026.

 

 

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