Much more dollars fled than entered the economy in July, such that the balance of payments (BOP) position hit an eight-month high deficit of $678 million on the month the peso neared its 11-year low.
The July BOP deficit was the widest since the $1.671 billion posted in November last year. It was a reversal of the $215-million surplus in the same month last year.
The BSP said the dollar outflows were “partially tempered” by its income from overseas investments and the government’s net foreign currency deposits.
“The BSP’s foreign exchange operations remained driven by increasing market demand for foreign exchange largely to finance capital goods imports. The BSP expects that the recovery in merchandise exports and higher-than-expected overseas remittances and business process outsourcing revenues would mitigate the current account and the overall balance of payments for the whole year of 2017,” the BSP said.
The BSP partly blamed the weaker peso on market concerns on the current account, which was expected to swing to a deficit of $600 million this year from a $600-million surplus last year as imports growth outpace that of exports.
BSP officials had said the surge in imports of capital goods was supporting the growing economy as well as the government’s plan to ramp up infrastructure investments.
As of end-July, the BOP position stood at a deficit of $1.384 billion, a reversal of the $848-million surplus last year.
During the first seven months, it was only in April that a monthly BOP surplus was registered, at $917 million.
The BSP had announced it expected the BOP position to settle at a deficit of $500 million.
In 2016, the BOP position settled at a $400-million deficit.
The BOP is a summary of all the businesses the country does with the rest of the world.
BOP data is tracked closely to ensure that the supply of dollars in the economy remains ample to allow the government and businesses to transact with the rest of the world.
Sources of dollar income for the country include remittances from Filipinos overseas, sales from exports of goods and services, as well as foreign investments and revenues from industries such as business process outsourcing and tourism.