Philippines extends dollar inflow winning streak into May

MANILA, Philippines — Net dollar inflows to the Philippine economy extended their winning streak into May 2019, pushing the cumulative value to their highest level in six years, the Bangko Sentral ng Pilipinas (BSP) said Wednesday.

In a statement, the central bank said the strong performance of the country’s balance of payments (BOP) – the aggregate net value of all transactions for goods and services with the rest of the world – in the first five months of the year gave the country a strong buffer of foreign exchange against potential economic headwinds from abroad.

On a cumulative basis, the balance of payments position for the January-May 2019 period posted a surplus of $5.19 billion, representing a turnaround from the $2.08 billion deficit recorded in the first five months of 2018. 

“The surplus may be attributed partly to remittance inflows from overseas Filipinos during the first four months of the year, and net inflows of foreign portfolio, foreign direct and other investments in the first quarter of 2019,” the central bank said.

For May alone, the country’s overall balance of payments position posted a surplus of $928 million, a reversal of the $583 million deficit recorded in the same month last year. 

Inflows in May 2019 stemmed mainly from the national government’s net foreign currency deposits, and BSP’s foreign exchange operations and income from its investments abroad. 

These were offset partially, however, by the payments made by the national government for its foreign exchange obligations during the month in review, the central bank said.

The balance of payments position reflects the final gross international reserves level of $85.36 billion as of end-May 2019. 

“At this level, the [dollar reserves] represents a more-than-ample liquidity buffer and is equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income,” BSP said. 

It is also equivalent to 5.1 times the country’s short-term external debt based on original maturity and 3.6 times based on residual maturity.