The Philippines’ foreign exchange buffers climbed to a fresh record in February, as surge in the valuation of gold holdings outweighed the retreat in foreign investments amid escalating geopolitical tensions in the Middle East.

According to data from the Bangko Sentral ng Pilipinas (BSP), gross international reserves (GIR) rose $105 million to $112.720 billion as of the end of February from the previous month.

The last figure was the fifth monthly increase in the last half-year and narrowly eclipses the previous peak of $112.707 billion set in September 2024.

The central bank’s gold reserves were the primary driver of the monthly gain, surging $2.4 billion US dollars, or 11.6 percent, to a record $23.1 billion. Global gold prices gained 7.9 percent in February as investors sought safe-haven assets following the outbreak of conflict in Iran and parts of the Middle East on Feb. 28.

Michael L. Ricafort, Chief Economist at Rizal Commercial Banking Corp. (RCBC), noted that the surge in bullion value provided the critical buffer. 
“Relatively high GIR would help fundamentally support and protect the peso exchange rate against any speculative attacks,” Ricafort said.

He explained that the reserves provide the necessary “US dollar supply and ammunition for any intervention in the local foreign exchange market, if necessary.”

The gains in bullion helped offset a #2.737 billion decline in foreign investments, which fell 2.8 percent to $85.650 billion. This retreat reflected heightened volatility in the global markets, driven by geopolitical risks in Iran, Greenland, and Venezuela.

The BSP’s current reserve level is equivalent to 7.5 months’ worth of imports, more than double the international benchmark of three to four months. This liquidity is vital as the peso faced pressure earlier this year, touching an intraday record low of 59.5 per US dollar on Jan. 20.

Ricafort said that the current GIR levels bolster the country’s external position, which has remained resilient despite the 
“Trump factor” and higher US import tariffs.

“The net increase in the GIR for most months since September 2022 somewhat correlated with the still relatively stable peso exchange rate,” Ricafort observed.

He added that the reserves are also approximately 4.2 times the country’s short-term external debt based on residual maturity.

The economist pointed out that while the government aims to tilt toward domestic borrowing to manage exchange rate risks, the high GIR level supports the sovereign’s credit profile.

“This still bolsters the Philippines’ external position that partly supported the relatively favorable credit ratings of the country well into the investment grade spectrum over the years,” Ricafort said.

The reserves were further supported by the government’s $2.75 billion global bond sale in January. Looking ahead, Ricafort expects structural inflows to remain “bright spots” for the economy.

Annual remittances from overseas Filipinos and earnings from the business process outsourcing sector combine for approximately $82 billion in recurring foreign exchange.

Ricafort noted that these, alongside record tourism revenues of $13 billion in 2024, are sufficient to cover the country's trade deficit, which narrowed to $49.1 billion in 2025.

“The new record high GIR could still strengthen the country’s external position, which is a key pillar for the country’s continued favorable credit ratings,” Ricafort concluded, noting that the country remains one to three notches above the minimum investment grade despite global headwinds.