FOREIGN PORTFOLIO INVESTMENTS registered a web influx in September, marking the third straight month that extra international capital entered the counstrive than left, the Bangko Sentral ng Pilipinas (BSP) stated on Thursday.
Transactions on short-term international investments registered with the BSP via approved agent banks posted a web inflow of $1.03 billion in September, a turnaround from the $698.01-million web outflows in the identical month a yr in the past.
Scorching cash inflows additionally almost doubled (92.1%) from $533.95 million posted in August.
Overseas portfolio investments are generally known as “sizzling cash” because of the ease with which these flows enter or depart the nation.
Knowledge from the central financial institution confirmed that gross inflows surged by 185.2% to $2.53 billion in September from $887.61 million in the identical month a yr in the past. Month on month, inflows soared by 84.7% from $1.37 billion.
Greater than half (57.5%) of inflows was invested in peso authorities securities, whereas the rest went to Philippine Inventory Alternate-listed securities concerned in banks, holding firms, property, transportation companies, and meals, beverage, and tobacco.
The bulk or 88.4% of investments for the month got here from the UK, Singapore, the US, Luxembourg and Malaysia.
Alternatively, gross outflows declined by 5% to $1.51 billion throughout the month from $1.59 billion a yr prior. Nevertheless, outflows surged by 80% in September from $836.78 million in August.
The central financial institution stated that 51.1% of complete outward remittances went to the US, equal to $769.93 million.
For the first 9 months of the yr, BSP-registered international investments yielded a web inflow of $3.02 billion, considerably greater than the $387.24-million web inflow in the identical interval final yr.
Rizal Business Banking Corp. Chief Economist Michael L. Ricafort stated that the inflows had been pushed by the latest fee cuts by the central financial institution.
The central financial institution started its easing cycle in August with a 25-basis-point (bp) discount, the first fee lower since November 2020.
It additionally delivered one other 25-bp lower in October, which introduced the goal reverse repurchase (RRP) fee to six%.
BSP Governor Eli M. Remolona, Jr. signaled the potential of one other 25-bp lower on the Financial Board’s final assembly for the yr on Dec. 19. If realized, this might convey the important thing fee to five.75% by end-2024.
Mr. Ricafort additionally famous the constructive influence of the latest reserve requirement ratio (RRR) discount on markets.
“Coverage fee cuts and RRR cuts are good for the financial markets particularly for bond markets and inventory markets; additionally good for the financial system with decrease borrowing prices that spur extra demand for loans, investments and different enterprise actions,” he stated.
In September, the BSP introduced its plans to scale back the RRR for common and industrial banks and nonbank monetary establishments with quasi-banking capabilities by 250 bps to 7% from 9.5%, effective on Oct. 25.
It additionally slashed the RRR for digital banks by 200 bps to 4%, whereas the ratio for thrift lenders was diminished by 100 bps to 1%. Rural and cooperative banks’ RRR was introduced down by 100 bps to 0%.
The BSP expects international portfolio investments to yield a web inflow of $4.2 billion in 2024. — Luisa Maria Jacinta C. Jocson
