BOP surplus hits $5.8B in 9 months
The Bangko Sentral ng Pilipinas on Friday raised concern about an “excessively strong peso” even as the country’s surplus in its balance of payments (BOP) rose 4.4 percent year-on-year to $751 million in September.
“The country’s external position continued to be strong in September, bringing the BOP surplus for the first nine months of the year to $5.8 billion, a level more than double the full-year forecast of $2.6 billion,” BSP Governor Amando M. Tetangco Jr. said.
“This healthy level also continues to reflect the positive outlook on the country relative to advanced economies and those in the region, specially with respect to our sustained strong growth path, fiscal consolidation and stable banking system,” Tetangco added.
However, BSP documents showed that the surplus for the January-September period was 40 percent less than the level in the same period of 2011.
The BSP chief added that with easy money conditions remaining in the advanced economies and as uncertainty continued to hover around the resolution of the European crisis, the Philippines continued to be a recipient of fund flows that, in turn, have supported the peso.
Earlier this week, the local currency has traced a strong trajectory on the back of encouraging economic data from the United States. But as of Thursday, the peso’s strong push eased as observers expressed concern that it had gained too much against the greenback.
During Thursday’s trading, the peso closed at 41.32 to $1 from a four-and-a-half year high of 41.185 previously.
“We are mindful of developments, both global and domestic, and we are watchful of market conduct,” Tetangco said. “We will not tolerate excesses in exchange rate movements and will not hesitate to consider other tools in our policy tool kit.”
The Monetary Board, the policy-making body of the BSP, will tackle its position in a meeting on Oct. 25.
The BOP is a closely watched economic indicator because it shows a country’s level of foreign-exchange liquidity, which is necessary to engage in commercial transactions with the rest of the world.
Factors that helped boost the country’s BOP included foreign investments, income from exports, remittances sent by overseas Filipinos and foreign currency-denominated loans extended to the government and income by the BSP from its investments abroad.
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