BSP: Net ‘hot money’ inflow surged in Nov ʼ22

The Philippine peso’s strong showing in November helped inbound short-term foreign investments surpass outbound “hot money” for the second month in a row, resulting in a net inflow of $489 million.

The local currency ended the month at 56.56:$1 coming from an all-time low of 59:$1 that the peso sank to in four separate trading days last October. It started 2021 at 51:$1.

Data at the Bangko Sentral ng Pilipinas (BSP) show that the November net inflow was more than four times the $110 million recorded in the same month of 2021, and also almost six times the $83 million posted October 2022.

The latest readout brought the net inflow of BSP-registered foreign investments in the January to November period to $794 million.

Eleven-month net inflow meant a turnaround from the net outflow of $570 million in the same period of 2021.

In November, $1.05 billion in BSP-registered short-term investments flowed into the country while $566 million flowed out.

PSE securities

Gross inflow for that month increased by 64 percent or $410 million from $645 million in October, and by 1 percent or $5 million from $641 million.

More than half or 55 percent of these investments were put in Philippine Stock Exchange-listed securities that were issued by companies engaged in the business of banking; operating as holding firms; property; food, beverage and tobacco; and telecommunications.

Also, 45 percent was lent to the government through investments in peso-denominated state securities and the remainder—less than 1 percent—was lent through other instruments.

United States

In November, 84 percent of gross inflow came from the United Kingdom; United States; The Netherlands; Luxembourg; and Singapore.

Meanwhile, the $566-million gross outflow for the month were less than half of the $1.17 billion recorded in November 2021, but still stable compared to $561 million in October 2022.

Close to three quarters or 72 percent of foreign investments withdrawn from the Philippines in November went to the United States.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said hot money readout in November was the best in seven months or since April 2022 when a prepandemic monthly high of $1.4-billion net inflow was recorded.

Ricafort said the improved foreign portfolio investment data was partly due to the relatively stronger peso exchange rate since the last week of September 2022 that also supported market sentiment, amid recent measures to stabilize both the peso exchange rate and overall inflation.

He said that in November, the peso gained against the US dollar for the second straight month after losing ground for eight straight months.

“Increased fund-raising and investment banking activities could have added to foreign portfolio investments in recent months,” he added.

Ricafort said the continued and further reopening of the Philippine economy would enable economic recovery prospects to gain further traction which, in turn, would help improve investment valuations and attract more foreign portfolio investments. INQ