Net ‘hot money’ inflow hits $388 million in 2009

MANILA, Philippines – The Philippines shrugged off the global recession and posted a net portfolio investments inflow of $388.02 million last year, a complete turnaround from the $1.784 billion outflow posted in 2008.

Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said that the net inflow last year reflected a major turnaround from the net outflow in 2008 amid the global recession.

“Amid the global recession, investor interest in the country was sustained by stable prices and low interest rates, the continuing growth in overseas Filipino remittances, robust reserves, a healthy banking system, and sound macroeconomic fundamentals,” Tetangco stressed.

Inflows, the BSP data showed, amounted to $6.335 billion last year or 23.8 percent lower than the $8.321 billion registered in 2008.

Major sources of portfolio investments that accounted for about 80 percent of the inflows came from the US, the United Kingdom, Singapore, Japan, and Hong Kong.

The BSP chief reported that investments in shares being traded at the Philippine Stock Exchange (PSE) accounted for about 76 percent while peso-denominated government securities cornered a 21 percent share of the total inflows.

He added that the remaining three percent was placed in peso time deposits with minimum maturity of 90 days and money market instruments.

Foreign investors, according to the BSP, remained upbeat on the Philippine market as evidenced by the record high gross international reserves (GIR) amid the steady growth in overseas Filipino workers’ remittances.

The country’s GIR jumped close to 20 percent to a new record high of $45.033 billion last year from $37.55 billion in 2008 due to strong inflows, government deposits, and the increasing value of the central bank’s gold holdings.

The GIR is the sum of all foreign exchange flowing into the country. This year, the BSP sees the county’s GIR hitting a new record high of between $47 billion and $48 billion on the back of the government’s strong external liquidity position.

The BSP sees OFW remittances increasing by four percent to a record $17.1 billion in 2009 from $16.4 billion in 2008. OFW remittances climbed by 4.5 percent to $14.321 billion from January to October last year compared with $13.707 billion in the same period in 2008.

Furthermore, inflation eased to 3.2 percent last year from 9.3 percent in 2008 despite the rise in consumer prices to an eight-month high of 4.4 percent in December due to higher oil and food prices. –Lawrence Agcaoili (The Philippine Star)