Nov BOP at surplus of $847M

THE Philippines’s dollar earnings registered a surplus in November this year, owing largely to strong economic conditions and a stronger local currency against the US dollar.

The Bangko Sentral ng Pilipinas (BSP) on Wednesday reported the country’s balance of payments (BOP) position for November, indicating an overall surplus of $847 million for the month.

The BOP is the summary of the country’s dollar transactions with the rest of the world; a surplus in this economic indicator means the

country earned more dollars than what it spent during the particular period, while a deficit means the economy lost more dollars than what it earned.

The country’s BOP only registered two months of surpluses in the first 11 months of 2018, the other one being in August at $1.27 billion.

The November BOP surplus is an improvement from the previous month’s deficit of $458 million and a reversal of the $44-million deficit also seen in November last year.

The Central Bank, in a statement released on Wednesday, said the BOP surplus was mainly brought about by the BSP’s foreign exchange operations and its income from its investments abroad during the month.

The BSP has a mandate to participate in foreign exchange operations to smoothen out any excess volatilities in the peso-dollar market.

Notably, the local currency gained considerable strength in November to average at 52.808 to a dollar during the month, from the previous month’s average value of 54.009 to a dollar.

The BSP said the surplus could have been larger, if not partially offset by the payments made by the national government for its foreign exchange obligations and its net foreign currency withdrawals during the month.

Earlier this month, the BSP also reported that the country’s foreign portfolio investments (FPI), one of the components of the BOP, also reverted to the net inflow territory in November.

November FPI yielded a net inflow of $832.07 million, the secondlargest net inflow for the year - next only to March’s $1.1 billion.

The BSP attributed the positive development during the month to decreasing global oil prices, the BSP’s decision to raise its policy rate and progress on the rice tariffication bill, all of which are expected to temper inflation.

It was in November when inflation first started to decelerate to 6 percent, from it 6.7-percent peak in the previous month.

However, the country’s BOP total for the first 11 months of the year is still at a deficit of $4.75 billion, higher than the $1.78-billion BOP deficit recorded in the comparable period in 2017.

“The higher cumulative BOP deficit for the period may be attributed partly to the widening merchandise trade deficit [based on the Philippine Statistics Authority’s preliminary data] for the first 10 months of the year,” the BSP said in a statement.

This trade deficit was then attributed to the sustained rise in imports of raw materials and intermediate goods, as well as capital goods, all as initial expenditures “support domestic economic expansion.”

The BSP expects a $5.5-billion BOP deficit by the end of the year.