MANILA – In February of this year, foreign portfolio investments, also known as hot money, recorded a substantial net inflow of USD 689 million through transactions facilitated by the Bangko Sentral ng Pilipinas (BSP) and authorized banks.

Data disclosed by the BSP late Wednesday (27 March 2024) revealed a USD 1.5 billion influx and USD 859 million in outflows for the month, resulting in the net figure.

This positive net inflow marks a significant turnaround from January 2024, which saw net outflows amounting to USD 76 million.

Foreign portfolio investments are characterized as hot money due to their rapid movements in and out of the economy.

The USD 1.5 billion invested in February represents a notable increase of 25.3 percent compared to January’s USD 1.2 billion.

During the period, 61.4 percent of investments were channeled into Peso Government Securities (GS), with the remaining 38.6 percent allocated to securities listed on the Philippine Stock Exchange. These investments were primarily directed towards banks, transportation services, holding firms, property, food, beverage, and tobacco sectors.

Major contributors to the investments hailed from the United Kingdom, Singapore, the United States, Luxembourg, and Hong Kong.

On the outflow side, USD 859 million was recorded for February, marking a 34.5 percent decrease from January’s USD 1.3 billion.

The United States remained the primary destination for outflows, receiving USD 485 million in total remittances.

For the initial two months of the year, foreign investments through BSP-authorized banks yielded a total net inflow of USD 613 million, a significant reversal compared to the USD 258 million net outflows observed during the same period last year.

(el Amigo/MNM)

MANILA — The Bangko Sentral ng Pilipinas (BSP) announced on Thursday, February 15, 2024, that personal remittances from overseas Filipinos hit an unprecedented peak last year, propelled by a surge in the deployment of overseas workers.

According to data from the BSP, personal remittances from OFWs reached USD 37.2 billion, marking a notable 3% increase from the USD 36.1 billion recorded in 2022.

“The substantial influx of inward remittances reflects the escalating deployment of OFWs, driven by the sustained demand for foreign labor in host nations,” stated the BSP.

The BSP further disclosed that the full-year 2023 remittances accounted for approximately 8.5% of the country’s gross domestic product and 7.7% of its gross national income.

Cash remittances channeled through banks amounted to USD 33.5 billion last year, reflecting a 2.9% surge from the USD 32.5 billion recorded in 2022.

“The growth in cash remittances from key sources such as the United States, Saudi Arabia, and the United Arab Emirates (UAE) significantly bolstered the overall increase in remittances for 2023,” added the central bank.

The United States retained the largest share of overall remittances during the period, followed by Singapore, Saudi Arabia, Japan, and the United Kingdom.

Michael Ricafort, Chief Economist at Rizal Commercial Banking Corporation, highlighted that Philippine remittances from overseas workers consistently rank as the world’s fourth-largest, following India, Mexico, and China. He emphasized the pivotal role of remittances as a resilient pillar of the Philippine economy, driving growth for numerous years.

Ricafort also noted the seasonal trend of increased OFW remittances during the fourth quarter, particularly in the lead-up to the Christmas holiday season, to accommodate heightened spending. He underscored this pattern as a crucial factor in supporting the peso exchange rate.

Looking ahead, Ricafort anticipated continued modest growth in OFW remittances, attributing it to the necessity for OFW dependents to contend with rising prices, necessitating additional remittances. He also pointed out another seasonal increase in OFW remittances anticipated around July to August due to shifts in the school year.

However, Ricafort cautioned against potential risks to OFW employment opportunities, including economic slowdowns in the United States, softer growth in China and other European nations, and geopolitical conflicts such as the Israel-Hamas conflict.

(By el Amigo/MNM)

MANILA — In a bid to address the financial needs of corporates more effectively, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. is pushing for improved access to the capital market.

Remolona’s statement comes in light of the findings from the 2023 Financial Stability Report (FSR) by the Financial Stability Coordination Council (FSCC), which revealed a heavy reliance on banks among companies for financial support, rather than utilizing the bond market and local stock exchange.

According to the latest FSR, corporate loans outstanding as of June 2023 amounted to PHP6.8 trillion, while corporate securities totaled only PHP1.6 trillion for the same period. The report also indicated a significant increase in corporate loans between September 2022 and September 2023, rising by PHP388.2 billion, with new corporate issuances increasing by PHP17.9 billion.

“We anticipate a growing demand for liquidity and term funding. While the banking industry can accommodate this increased leverage within regulatory limits, there is potential for the capital markets to play a more significant role,” noted the 2023 FSR.

Remolona emphasized the need to diversify the corporate bond market, stating, “Currently, it’s predominantly triple-A rated, with few double-A issuances. This limited accessibility does not reflect a robust corporate bond market in my view.”

Addressing concerns about portfolio investment, Remolona remarked, “We have traditionally viewed portfolio investment as hot money, potentially destabilizing. However, nowadays, portfolio investments, particularly passive investments like index funds and global exchange-traded funds, are becoming more common.”

Furthermore, Remolona underscored the importance of the FSR in identifying underlying risks amidst favorable economic conditions. The report offers insights into the macroeconomy and international markets, focusing on systemic risk and analyzing how various factors may interact.

“This FSR provides an institutional-level assessment of our capital markets and their potential to enhance the resilience of the Philippine economy,” stated the BSP governor.

(el Amigo/MNM)

MANILA — In its latest announcement, the Bangko Sentral ng Pilipinas (BSP) stood firm on its decision to maintain the policy rates, keeping the Target Reverse Repurchase (RRP) Rate steady at 6.50 percent.

BSP Governor Eli Remolona Jr., addressing concerns, highlighted that risks to inflation still linger on the upside.

Inflation Landscape

Headline inflation, registering at 4.1 percent in November, showed a marginal decrease, aligning closely with the upper limit of the government’s 2 percent to 4 percent target. Governor Remolona underscored the persistent risks associated with potential increases in transport charges, electricity rates, and oil prices.

Forward Strategy

Despite the ease in headline inflation, Governor Remolona emphasized the necessity of maintaining a vigilant stance, especially with potential external and domestic economic shifts. The BSP remains committed to closely monitoring responses from businesses and households amid evolving monetary policy conditions.

Inflation Outlook

While the overall inflation outlook remains stable, the BSP has adjusted its risk-adjusted inflation forecast for 2023 to 6 percent, slightly lower than the previous projection of 6.1 percent. Projections for 2024 and 2025 have also been revised, reflecting the BSP’s anticipation of the impact of El Niño persisting until the second quarter of 2024.

BSP’s Approach

Senior Assistant Governor Iluminada Sicat acknowledged the BSP’s expectations for a return to the inflation target by the first quarter of 2024. She emphasized that a temporary acceleration above the target might occur from April to July due to the influence of El Niño. The BSP projects a gradual return to the target range by the third quarter of 2024, aligning with the decline in global oil prices.

Looking Ahead

In response to inquiries about the possible end of the tightening cycle, Sicat stated that the BSP awaits firmer indications that inflation expectations are firmly anchored within the target range and that actual inflation has reverted to the target path. With a total of 450 basis points in policy rate hikes since the previous year, the BSP remains committed to aligning inflation with the government’s target.

(ai/mnm)

Photo courtesy of Philippine News Agency

MANILA – The Bangko Sentral ng Pilipinas (BSP) reported that, as of September this year, a total of PHP 98.8 million worth of coins have been deposited through its Coin Deposit Machines (CoDMs).

In a statement released late on Tuesday, the BSP announced that this amount is equivalent to 37.2 million coins from over 37,000 transactions.

The highest single transaction recorded among the CoDMs was worth P100,260.

CoDMs enable customers to conveniently deposit legal tender coins, with the equivalent amount directly credited to their GCash or Maya electronic wallets (e-wallets).

The BSP has recently deployed an additional 15 coin deposit machines, bringing the total number of units available in the Greater Manila Area to 25.

These machines are located at the following places: SM Megamall, Mandaluyong City; SM City Grand Central, Caloocan; SM City Marilao, Bulacan; SM City Taytay, Rizal; SM Hypermarket FTI, Taguig City; SM Southmall, Las Piñas City; SM City Sucat, Parañaque; SM City Calamba; SM City Marikina; SM City San Mateo, Rizal; SM City Valenzuela; Robinsons Place Metro East, Pasig City; Robinsons Place Novaliches, Quezon City (QC); Robinsons Place Antipolo, Rizal; and Robinsons Place Magnolia, QC.

“With more CoDMs installed in various retail establishments, the BSP expects wider public use, which will lead to more efficient coin recirculation in the country,” the BSP stated.

The BSP also reminded the public to ensure that coins for deposit must not be taped or bundled, should not include foreign objects such as buttons, magnets, nails, tokens, and screws, and should be placed in the machine’s coin slot by the handful.

Customers are also advised to ensure that their e-wallet accounts are valid and active and that their transactions fall within the prescribed wallet and transaction limits of their e-wallet service provider.

(ai/mnm)