Almost $1B in hot money inflows noted in July

MANILA  -Two-way traffic of short-term investments or “hot money” registered with the Bangko Sentral ng Pilipinas showed net inflows of $962 million in July, reversing from net outflows of $103 million in the same month of 2022.

Even then, the monthly readout was much improved compared to net inflows of $280,000 in June, which followed four consecutive months of net outflows.

Gross inflows in July reached $1.58 billion or 132 percent higher than the $680.7 million recorded in the same month last year.

Meanwhile, $614.5 million left the country in July, dropping by 21.6 percent from $783.9 million in gross outflows a year ago.

About three-fifths or 63 percent of gross inflows in July was invested in peso-denominated government securities and other financial instruments.

Also, 37 percent was invested into companies whose shares are traded on the Philippine Stock Exchange, such as those that are engaged in banks; property; food, beverage and tobacco; operating as holding firms, and those in the businesses of transportation services.

Eighty-six percent of the inbound capital came from the United Kingdom, United States, Singapore, Luxembourg and Germany.

Meanwhile, 65 percent of the gross outflows went to the United States.

From January to July, traffic of hot money showed net inflows of $158 million, which was 76.6 percent less than the $675-million net inflows recorded for the same period last year.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the improvement in net foreign portfolio investments last July may have been helped by the continued easing of inflation in the Philippines.

“The slower bank loans growth is also partly due to the rising trend in global and local interest rates in recent months, as well as higher prices or inflation,” Ricafort said.

These factors, he said, lead to higher borrowing costs for consumers, businesses and other institutions that, in turn, partly slowed down the demand for loans.