Net hot money inflow up in Sept

MANILA, Philippines - Net hot money inflow amounted to $631.46 million from Sept. 1 to 27, indicating the return of foreign portfolio investments into the country following volatilities that hounded financial markets this year.

Gross inflows during the review period amounted to $2.445 billion as against gross outflows of $1.814 billion, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP).

The latest figure was a reversal of the  $441.56-million net outflow recorded in August and surpassed by a notable margin the $402.23- million net inflow recorded in September last year.

Foreign portfolio investments are also called hot money for the manner in which they can be easily invested in and taken out of markets. These foreign investments are put in local stocks, government securities, and corporate bonds as well.

Since the start of the year, the country has seen four months of net hot money outflow due largely to volatilities abroad.

In March, the repatriation of portfolio investments was due to uncertainties in the euro zone. Meanwhile, the net hot money inflow in May, June, and August was blamed to the impending tapering of the US Federal Reserve, which prompted investors to sell their assets in emerging markets and bring them back home.

Tim Condon, ING Bank’s regional economist for Asia, said the return of foreign portfolio investments into the Philippines may stoke a peso appreciation.   

“Associated hot money inflows are exerting peso-appreciation pressure. We have revised our year-end forex forecast to 42.8:$1 from 43.5:$1,” Condon said.

ING’s year-end forecast is more than four percent weaker than the peso’s finish in end-2012 of 41.05 to $1.