PH bags ‘hot money’ on Trump card

Uncertainty among investors due to US President Donald J. Trump’s controversial policies continued to push so-called “hot money” toward markets like the Philippines, resulting in a net inflow of foreign portfolio investment during the first three weeks of January.

Separately, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said Philippine monetary authorities are gearing up for the US Federal Reserve’s expected rate hikes this year.

“As expected, the Fed kept rates on hold. Its relatively positive outlook on the US economy suggested it is on track with policy tightening this year,” Tetangco said in a text message to reporters Thursday, referring to the Federal Open Market Committee (FOMC) meeting on Feb. 1.

“This is roughly consistent with what we have incorporated in our baseline scenario. We will note this development in our policy meeting next week, as well as the inflation outlook over the policy horizon,” Tetangco added.

Last Dec. 14, the policy-setting FOMC unanimously voted to raise the key federal funds rate to the 0.5-0.75 percent range. The last time the US Fed raised interest rates was in December 2015.

US Fed officials expect three more hikes next year to bring the rate to 1.4 percent by end-2017 to counter inflation amid Trump’s promise to increase infrastructure spending and cut taxes for businesses.

The latest BSP data showed that as of Jan. 20, foreign portfolio investment posted a net inflow of $62.61 million as the three-week inflow of $576.56 million exceeded the $513.94-million outflow.

The net inflow recorded in the first three weeks of 2017 reversed the $79.95-million net outflow a year ago.