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Hot money exits anew

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The country continues to bleed foreign currency as foreign portfolio investments (FPI), also known as hot or speculative money, yielded net outflows for the month of October.

Data from the Bangko Sentral ng Pilipinas (BSP) showed FPI in October with net outflows of $221 million, higher than the recorded $24 million net outflows month-ago.

“It may be noted that the $221 million net outflows were a reversal from the $439 million net inflows recorded for the same period a year ago,” the BSP said.

The central bank traced this development to the larger decline in investments, which outweighed the measly drop in gross outflows.

“The $1.17 billion gross outflows for the month were lower by 3.5 percent (or by $42 million) than the $1.21 billion recorded in September 2021,” the BSP said.

Bulk or 69 percent of the hot money exited to the US.

Registered investments of $950 million on the other hand, slipped by 20.1 percent and 29.8 percent versus previous month’s $1.2 billion and October 2020’s 1.4 billion.

Majority or 95.6 percent of the FPI were placed in securities listed in the local bourse while investments in peso-denominated government IOU accounted for the remaining 4.4 percent.

By country source, the United Kingdom, US, Hong Kong, Luxembourg and Switzerland were the top five investor countries for the month, having a combined share to total at 70.7 percent.

Michael Ricafort, chief economist the Rizal Commercial Banking Corp. said a reduction in new COVID-19 cases in the country–to be followed by further reopening of the economy will help improve FPI data in the coming months.

 

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