The country’s dollar income swung to a deficit in August amid jitters over the timing of the US Federal Reserve’s plan to reduce its monthly asset purchases.
Data released by the Bangko Sentral ng Pilipinas (BSP) showed the country’s balance-of-payments (BOP) position deteriorated to a deficit of $318 million in August.
“That was due to financial market volatility arising from the uncertainty about the (US Federal Reserve) taper,” said BSP Governor Amando M. Tetangco Jr.
But he added that the volatility would “likely be temporary.”
BOP refers to all the foreign exchange that entered and left the country during a certain period. A deficit means more money was spent to pay for goods and services from abroad than was earned by the country from exports, remittances and investments.
The BOP position in August—the first deficit in half a year—was a reversal from the $1.099-billion surplus posted the month before.
This brought the country’s year-to-date BOP position to a surplus of P3.359 billion, lower than July’s $3.677 billion.
The BOP deficit was mainly driven by the flight of short-term foreign investments from the Philippines as the US economy showed further signs of recovery.
Foreign portfolio investments or placements in stocks, bonds and government securities, stood at a net outflow of $441.85 million at the end of August. This meant more foreigners sold their interests in the Philippines.
The amount was enough to offset the money the country earned from exports, overseas Filipino remittances, business process outsourcing and the tourism sector.
Remittances and BPO revenues are two of the country’s biggest sources of foreign exchange income.
Money sent home by OFWs is expected to grow 5 percent this year to $22.5 billion. BPO revenues are likewise seen growing to $16 billion this year from $13.5 billion in 2012. Paolo G. Montecillo