The country registered a higher surplus in its balance of payments (BOP) in January due to rising foreign portfolio inflows and income generated by the central bank from its securities investments.
The Bangko Sentral ng Pilipinas (BSP) on Tuesday reported that the BOP surplus hit $2.04 billion in January—up by 136 percent from the $864 million posted in the same month last year.
“The BOP surplus for January was supported by foreign exchange operations and income from [the central bank’s] investments abroad,” said BSP Governor Amando Tetangco Jr.
BOP is a closely watched indicator of foreign exchange liquidity. It is the difference between the inflow and outflow of foreign currencies. A surplus leads to a buildup of the Philippines’ holding of foreign currencies, also known as gross international reserves (GIR).
The central bank earlier reported that the GIR in the first month of the year hit an all-time high of $85.76 billion—up by 11 percent from the $77.36 billion posted in the same period last year.
Foreigners buying peso-denominated stocks, corporate bonds and government securities account for the bulk of the inflows.
The Philippines, along with other emerging markets in Asia, had seen a significant increase in foreign portfolio investments since last year.
Tetangco in a statement said that, with the advanced economies in the West still struggling, the Philippines should continue to see substantial inflows of foreign portfolio investments.
Although the BOP surplus in January marked a sharp rise from that of the same month last year, the BSP said that the full-year figure could come out lower than the $9.2 billion registered in 2012.
The BSP cited expectation that domestic firms would import more goods, thereby fueling an increase in the outflow of dollars.
The BSP earlier set its BOP surplus projection for this year at $3 billion. But this figure is now up for review, Tetangco said.
“The full-year projection is for a surplus of $3 billion. When this projection was made in late 2012, the expectation was that, among others, the country would have a larger trade deficit as imports would recover in line with a recovery in the export market, given the expected improvement in the external environment,” Tetangco said. However, “we will revisit this projection shortly.”