The Philippines’ external financial standing strengthened in May this year, as the country's gross international reserves (GIR) posted a notable increase, bolstering its capacity to withstand external economic pressures.

The Bangko Sentral ng Pilipinas (BSP) reported that the country’s GIR reached $105.5 billion at end-May 2025, higher compared with $105.3 billion at the end of April, providing a robust external liquidity buffer for the country.

BSP Governor Eli M. Remolona, Jr., said the latest GIR level provides a robust external liquidity buffer, equivalent to 7.3 months' worth of imports of goods and payments of services and primary income. 

It also covers about 3.7 times the country's short-term external debt based on residual maturity.

The month-on-month increase in the GIR level was primarily due to three factors. First, there were upward valuation adjustments in the BSP’s gold holdings, driven by the increase in the price of gold in the international market. 

Second, net income from the BSP’s investments abroad contributed to the rise. Third, the national government’s net foreign currency deposits with the BSP also contributed to the accumulation.

The net international reserves (NIR) also registered an increase, rising by $0.08 billion from $105.26 billion as of end-April 2025 to $105.34 billion as of end-May 2025. 

According to the BSP, this indicates a consistent strengthening of the country's external position. 

The BSP has consistently managed the country's reserves to ensure ample liquidity and financial system stability. The current levels provide a significant buffer against potential external shocks and support the country's payment obligations for imports and external debt.

Michael L. Ricafort, Rizal Commercial Banking Corp. chief economist, said a slight increase last month comes after two consecutive months of decline and a general downward trend since October 2024, when the "Trump factor" began to emerge as an external risk. 

Ricafort noted that the primary driver for the increase was the continued rise in gold holdings, which reached a new record high of $13.7 billion. This represented a month-on-month increase of 2.9 percent and a year-on-year surge of 37 percent. 

World gold prices recently hovered near record highs of $3,500.10 per ounce on April 22, 2025. The gains in gold holdings offset a decline in foreign investments, which fell by $251 million month-on-month to $86.4 billion. 

This decline in foreign investments, lower than the record high of $95.2 billion in September 2024, was attributed to the ongoing "Trump risk factor/premium" that has led to global market volatility, particularly a net sell-off in US financial markets and other risky asset classes since Trump's reciprocal tariffs on April 2, 2025.

However, Ricafort added that this has been partially offset by a shift of funds into safer havens such as gold, the Swiss franc, and the euro.

The RCBC chief economist noted that the GIR remains above the US$100-billion mark for the 20th consecutive month, signaling a strong external position for the country that can help stabilize the peso exchange rate and support the Philippines' favorable credit ratings.