8-month BOP surplus surges to $9B

GROWING B.O.P. SURPLUS The Philippines’ BOP enjoyed a surplus of $9 billion in the first eight months, more than double the $3.38 billion in the same period last year. The growing BOP surplus has put the country’s total reserves of dollars and other foreign currencies at $75.6 billion as of end-August, a record high. PHOTO FROM CONVERSIONDOLLAR.FR

The country’s balance of payments (BOP) posted a surplus of $2.72 billion in August, the highest in eight months, as remittances, foreign portfolio investments and other inflows of foreign currencies remained robust.

A report from the Bangko Sentral ng Pilipinas showed that the latest BOP surplus was up more than 18 times from only $151 million in the same month last year.

This brought the surplus in the first eight months of the year to $9 billion, more than double the $3.38 billion registered in the same period last year.

The BOP is a record of the country’s financial transactions with the rest of the world. A surplus shows that the country earns more dollars and other foreign currencies than what it spends.

A surplus increases the country’s overall reserves of foreign currencies, or the gross international reserves, which determine its ability to pay for imported goods, settle foreign debts and engage in other external transactions.

The growing surplus in the BOP has put the country’s total reserves of foreign currencies at $75.6 billion as of end-August, a record high.

Some of the country’s biggest sources of foreign currency inflows include remittances from overseas Filipinos and foreign portfolio investments.

Remittances have remained strong this year despite problems experienced in some major labor markets, among them the anemic economic performance of the United States and some European countries and the call of the Saudi government for employers to prioritize locals in their recruitment.

Citing data from the Philippine Overseas Employment Administration, the BSP said the sustained rise in remittances was due to persistently strong demand for Filipino workers in alternative labor markets.

The central bank reported earlier that remittances in the first seven months of the year reached $11.4 billion, up 6.3 percent year on year.

Meantime, the BSP also reported that net inflow of foreign portfolio investments surged to $3.1 billion in the first eight months of the year, more than triple the $926 million recorded in the same period last year.

Officials credited this to the higher economic growth of emerging markets in Asia compared with the performance of industrialized countries.

They said the gap has prompted investors to shift some of their funds to emerging markets like the Philippines.

Officials also cited the significantly higher interest rates in emerging Asian countries compared with those in developed economies. The interest rate differentials have encouraged yield-seeking portfolio investors to invest more in the Philippines and its neighbors.

While interest rates in the Philippines and other Asian economies have risen since early this year, that in the United States remained at historic-low level of near zero.