Hot money outflows could weaken peso
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Thu, 18 Apr 2019 16:11:57 +0000
The exit of speculative funds from the Philippines could reverse the peso’s gains versus the dollar, an analyst said.
“Continued moves in this direction could weaken the local currency going forward, which while a boon to exporters, may be detrimental to inward movement of capital goods needed to support the aggressive infrastructure push of the administration as it enters the final three years of its term,” Philstocks.ph senior research analyst Justino Calaycay Jr. warned.
The currency ended 2018 at P52.58 versus the greenback, down sharply from its 2017 close of P49.93:$1. It has since improved and is currently trading in P51:$1 territory, finishing at P51.76 against the dollar on Wednesday.
Philippine financial markets are currently closed for the Holy Week break.
Calaycay’s comment came after the central bank reported that foreign portfolio investments turned negative in March.
The $739-million net “hot money” outflow was a reversal from February’s $339.57-million net inflow. It was also the largest since a $807.15-million net outflow in September 2016 and a turnaround from the year-earlier net inflow of $1.132 billion.
Large outflows from government securities offset investments in Philippine Stock Exchange-listed issues, the central bank noted.
“The outflows may be a result of investors opting to move funds out of Philippines given suggestions that domestic rates will likely be where it stands at present with a bias in favor of easing,” Calaycay told The Manila Times.
He added that the hot money flows, in part, were also likely affected by uncertainties over the 2019 national government budget, which was only signed last Monday by President Rodrigo Duterte following months of delay.
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