FOREIGN PORTFOLIO INVESTMENTS registered a net inflow in September, It was the third month in a row that more foreign capital entered the countrythen try the Bangko Sentral ng on the left PiliPinas (BSP) said this on Thursday.
Transactions on short-term foreign investments registered with the BSP through recognized agent banks posted a net inFlow of $1.03 billion in September, turnaround after net spend of $698.01 millionFlows in the same month a year ago.
Hot money inflows also nearly doubled (92.1%), compared to the $533.95 million recorded in August.
Foreign portfolio investments are commonly referred to as “hot money.” because of the ease with which they flow entering or leaving the country.
Central bank data showed that gross inFThe lows rose 185.2% to $2.53 billion in September, compared to $887.61 million in the same month a year ago. Month on month, premium income rose 84.7% to $1.37 billion.
More than half (57.5%) of the inflows were invested in peso government bonds, while the remainder went into Philippine stock exchange-listed securities of banks, which Fproperty, property, transport services and food, drink and tobacco.
The majority (88.4%) of investments for the month came from the United Kingdom, Singapore, the United States, Luxembourg and Malaysia.
On the other hand: laughing at itFThe lows fell 5% to $1.51 billion this month, compared to $1.59 billion a year earlier. However, outFThe low rose 80% in Septemberfrom $836.78 million in August.
The central bank said 51.1% of total outward remittances went to the United States, amounting to $769.93 million.
For the FIn the first nine months of the year, foreign investments registered with the BSP generated a net profitFlow of $3.02 billion, up significantly from $387.24 million net inFlow in the same period last year.
Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said the inFThe lows were caused by the recent interest rate cuts by the central bank.
The central bank started its easing cycle in August with a 25 basis points (bp) cut. FFirst interest rate cut since November 2020.
In October, it also delivered a further cut of 25 bps, bringing the target reverse repurchase (RRP) rate to 6%.
BSP Governor Eli M. Remolona Jr. signaled the possibility of another 25 basis point cut during the last Monetary Council meeting for the year on December 19. If this were achieved, it would bring the policy rate to 5.75% at the end of 2024.
Mr. Ricafort also noted the positive impact of the recent reserve requirement ratio (RRR) reduction on the markets.
“Policy rate cuts and reductions in the RRR are good for the economy Ffinancial markets, especially for bond markets and stock markets; also good for the economy, with lower financing costs boosting demand for loans, investments and other business activities,” he said.
In September, the BSP announced its plans to reduce the RRR for universal and commercial banks and non-bank financial institutions with quasi-banking functions by 250 basis points from 9.5% to 7%.Feffective October 25.
It also cut the RRR for digital banks by 200 basis points to 4%, while the ratio for thrift lenders was reduced by 100 basis points to 1%. The RRR of rural and cooperative banks was reduced by 100 basis points to 0%.
The BSP expects foreign portfolio investments to generate net incomeFlow of $4.2 billion in 2024. – Luisa Maria Jacinta C. Jocson