September BoP hits $3.5-B surplus

The country’s global financial transactions, known as balance of payments (BoP), resulted in a surplus of $3.5 billion last month due to higher net foreign currency deposits of the national government and investments by the Bangko Sentral ng Pilipinas (BSP).

September’s BoP was a reversal of the $414 million deficit recorded in the same month last year by the BSP for the country’s international financial transactions or BoP.

The new September level increased the country’s BoP surplus from January to September to $5.1 billion, up from $1.7 billion in the same period last year.

BSP data showed the growth stemmed from lower payments for exports, sustained inflows of personal remittances from overseas Filipinos, foreign investments, investment gains of the central bank and net foreign borrowings by the national government.

Specifically, the trade deficit from imports and exports as of August declined to $34.3 billion from $35.9 billion as the peso strengthened against the US dollar.

Due to other sources of foreign-denominated income, BSP said the country continued to secure more than adequate gross international reserves (GIR) at $112.7 billion as of September from $107.9 billion as of August.

“The latest GIR level represents a more than adequate external liquidity buffer equivalent to 8.1 months’ worth of imports of goods and payments of services and primary income,” BSP said.

FDIs seen perking up too

Moving forward, Rizal Commercial Banking Corp. chief economist Michael Ricafort said foreign direct investments might grow as investors gain extra funds due to a robust business environment and possible lower interest rates in the US.

“We’ve seen mostly better US economic data (retail sales, initial jobless claims). The Federal Reserve is also seen to cut its rate by 25 basis points next month, with a 92 percent chance,” he said.

He added investors might want to take advantage of the positive outlook on earnings of companies listed with the Philippine Stock Exchange due to the country’s strong economic foundations.

“We’ve seen mostly better local inflation, gross domestic product, employment, bank loans, and other economic data recently, as well as mostly better corporate sales and earnings reports by some listed companies,” Ricafort said.

The economist said the peso has remained strong against the US dollar amid geopolitical tensions, signaling relatively cheaper costs for imports.

“The peso exchange rate is still among the strongest versus the US dollar in nearly five months,” he said.

The peso-dollar rate closed at 57.511 on Friday, lower than the over 58 level recorded in May by the Bankers Association of the Philippines.