BSP reported record foreign money outflow in January

MANILA, Philippines—A total of $4.48 billion in foreign money left the country last month amid volatile conditions in financial markets, with investors selling Philippine assets at a record pace.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed the country’s balance-of-payments (BOP) swung to a deficit of $4.48 billion in January, nearly wiping out the surplus of $5 billion accumulated in all of 2013.

The deficit in January compares to the surpluses of $2.04 billion and $419 million in January and December of 2013, respectively.

The country’s BOP position is an accounting of the country’s transactions with the rest of the world. This measures the movement of foreign exchange in and out of the economy.

“It’s a big one,” BSP Deputy Governor Diwa C. Guinigundo told reporters on Wednesday, describing the outflow for January.

In January, data from the BSP showed there was a $1.8 billion net outflow of foreign portfolio investments—the highest for any single month on record.

Guinigundo said apart from foreign portfolio flows or “hot money,” other reasons for the BOP deficit might have been foreign debt payments by the government and local businesses, as well a higher import bill in January.

Data for debt payments and imports for January have not yet been released.

Guinigundo said the BSP was expecting the situation to “normalize” in the remaining months of the year as conditions in capital markets calm down.

Volatility in the foreign exchange, stock and bond markets started in late 2013 and spilled over to the start of the current year as a result of the US Federal Reserve’s scaling down of its monetary stimulus as the recovery of the US economy gained momentum.

“As the situation normalizes… we should see improvements in the BOP,” Guinigundo said, referring to the recent improvements in the performance of the peso and local share prices in their respective markets.

After falling to the 45-to-$1 level in January, the peso has recovered to 44: $1 in February. In the local bourse, the Philippine Stock Exchange Index (PSEi) returned to the 6,200-territory this week after falling below 6,000 points earlier this year.