Thursday, 18 February 2010

January BoP surplus hit $1.2b on bond float

by Roderick T. dela Cruz
Manila Standard
http://www.manilastandardtoday.com/insideBusiness.htm?f=2010/february/18/business3.isx&d=2010/february/18

Strong remittances, investment inflows and proceeds from a $1.5-billion global bond float pushed the country’s balance of payments position to a surplus of $1.233 billion in January this year, the highest in 12 months, data from the Bangko Sentral showed Wednesday.

It marked the second time that the monthly BoP surplus topped the $1-billion mark, after reaching $1.215 billion in December.

The January BoP surplus, however, lower than $1.735 billion recorded during the same month in 2009.

Bangko Sentral expects the BoP surplus this year to hit a range of $3 billion to $4 billion, slightly down from $5.295 billion in 2009.

Remittances from migrant Filipino workers last year rose 5.6 percent to $17.348 billion while foreign portfolio investments posted net inflows of $388 million despite the global economic crisis.

Foreign portfolio investments, or overseas funds temporarily invested in local stocks and securities, recorded net inflow of $170 million in January.

Standard Chartered Bank economist Nicholas Kwan said he expected remittances to go up by 6 percent this year.

Frederic Neumann, economist of the Hong Kong and Shanghai Banking Corp., predicted that remittances would remain robust, growing by at least 5.8 percent in 2010.

A strong BoP surplus is expected to protect the economy from external shocks, said World Bank senior economist Eric Le Borgne.

This would also support the value of the peso this year, which is expected to end at a range of 43 to 44 per dollar by the fourth quarter, said Kwan.

Bangko Sentral has been accumulating foreign exchange reserves over the past eight years to take advantage of strong dollar inflows. The gross international reserves hit $45.4 billion in January this year.

The reserves are expected to receive a boost after the Philippines said it planned to borrow $2.5 billion from foreign creditors this year to help plug a widening budget deficit. It successfully sold $1.5 billion worth of global bonds in January this year.

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