Philippines' forex surplus up a third at end-May

MANILA - The Philippines' balance of payments (BOP) surplus in the first five months of the year went up by more than a third from a year ago, the Bangko Sentral ng Pilipinas said on Wednesday.

Data from the BSP showed that the country's foreign-exchange surplus at end-May went up by 44.7 percent to $1.809 billion from $1.302 billion last year.

In May however, the surplus of $75 million was $63 million lower than last year's $138 million.

The BOP summarizes the country's economic transactions with the rest of the world. A surplus means the country earned more dollars than it paid for overseas transactions.

The BSP earlier reported that the country suffered net outflows of $641 million worth of foreign portfolio investments in May, a reversal of the net inflows of $1.1 billion in April and $106 million in May of last year.

The BSP forecast the country's external payments position to moderate to $3 billion by yearend on expectations of a 12 percent year-on-year increase in imports.

Sustained BOP surpluses help build up the country's gross international reserves (GIR), an ample supply of which helps prop up the peso and keeps domestic inflation at bay.

The country's dollar reserves slipped to $82.9 billion last month from $83.2 billion in April because of the drop in the price of gold in the international market, as well as payment of the country's foreign-currency debts.

source: interaksyon.com

BSP to revise upwards forex reserves forecast

MANILA - The Bangko Sentral ng Pilipinas will revise upwards this year's forecast for the country's gross international reserves.

On the sidelines of the Philippine Economic Briefing, BSP Governor Amando M. Tetangco Jr. said the revision forms part of the central bank's review of its balance of payments assumptions.

The country's foreign exchange reserves climbed to $80.8 billion in the first eight months of the year, well above the BSP's full-year forecast of $78 billion.


At end-July, the Philippines' BOP surplus already hit $4.498 billion, higher than the full-year forecast of $2.6 billion.

The review of the central bank's BOP assumptions comes as the Philippines enjoys huge inflows of foreign portfolio investment - so-called "hot money" - brought about by the weakness in advanced economies, leading investors to search for yields higher than are available in those markets.

The BSP registered hot money inflows of $1.3 billion last month, 41.8 percent lower than in July and 6.6 below that in August of last year. Portfolio outflows reached $868 million, resulting in net inflows of $387 million last month, 60 percent lower than the $963 million in July and 1.7 percent below the $394 million in August 2011.

The strong foreign fund inflows has caused the peso to hit four-year highs against the US dollar.

With a report from Krista Angela M. Montealegre

source: interaksyon.com