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Hot money cools down

Joshua Lao

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NET outflows amounted to $660 million. W. Commons

Foreign currency continues to leave as portfolio investments, also known as hot or speculative money posted net outflows for the month of April, latest data from the Bangko Sentral ng Pilipinas (BSP) show.

“BSP-registered foreign portfolio investments for April 2020 yielded net outflows of $660 million resulting from the $1.3 billion gross outflows and $627 million gross inflows for the month,” the BSP said.

“This is lower than the recorded net outflows of $961 million in March,” it added. Bulk or 61.7 percent of the overall outflows went to US.

Gross inflows on the other hand, witnessed a 34.3 percent drop in April to just $627 million from the recorded $954 million month-ago. This translates to the lowest recorded gross inflow since July 2010, when it stood $14 million.

Debt papers preferred
Of the total inflows, 91.2 percent were placed heavily on debt instruments listed in the local bourse while the remaining 8.8 percent went to peso-denominated government securities.

By country source, the United Kingdom, US, Singapore, Hong Kong and Switzerland comprised the top five investor countries in April with combined share to total at 85.5 percent.

On a cumulative basis, hot money resulted to net outflows of $2.1 billion as gross outflows amounted to $6.3 billion, overwhelming gross inflows of only $4.2 billion.

Serious reversal
“This is a reversal from the $37 million net inflows noted for the same period last year brought about by uncertainties due, among others, to the impact of the coronavirus disease pandemic to the global economy and financial system,” the central bank explained.

Other factors contributing to the sustained outflow of investments include the ongoing US-China trade war and the renegotiation of the contracts of the country’s water concessionaires.

The BSP is yet to come up with their revised or retained foreign portfolio assumption for 2020. Current forecast stands at $8.2 billion net inflows.

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