50.95 BOP deficit up at $706 M as of June
As peso hits
The country’s balance of payments (BOP) surged to a deficit of $569 million in June, bringing the year-to-date shortfall to $706 million for the first half of 2017, data from the Bangko Sentral ng Pilipinas (BSP) show.
The central bank has estimated a full-year BOP deficit of only $500 million. BSP Deputy Governor Diwa C. Guinigundo yesterday said the projection is “doable” based on their fund flow outlook. The June BOP is the second highest monthly BOP deficit for the year, after April's $917 million.
“We believe that the second half will show a stronger external payments position on account of the usual current account flows including OFW remittances, tourist receipts and BPO (business process outsourcing) revenues,” remarked Guinigundo.
“So, the $500 million expected shortfall is still doable. FDIs (foreign direct investments) are also expected to come in stronger in the second half.”
The peso on Wednesday, in the meantime, reacted partly on the higher BOP numbers, and hit a day’s high of R50.95 from the previous rate of R50.77 but closed at R50.94.
Guinigundo said the further weakening of the local currency was triggered by the higher corporate demand for foreign exchange. “(This) affected the foreign exchange operations of the BSP coupled with debt payments by the National Government (NG). These were mitigated by NG deposits with BSP and inflows from BSP’s investment income from abroad.”
The country’s increasing import bill is also affecting the peso rate vis-à-vis the US dollar and further added to its depreciation.
“Although trade data are not yet available for June, we surmise that while exports continued to recover, the expanding economy pushed imports higher particularly of capital goods and raw materials. This contributed to the recent downtrend of the peso against the US dollar even as the overall macroeconomic fundamentals remain robust,” he explained.
BSP officials revised its external account numbers in anticipation of higher imports this year, as well as other external factors that would impact on BOP such as rising US interest rates and the uneven global growth.
In May, remittances were reported to have increased by 5.5 percent year-onyear to $2.3 billion and bringing the fivemonth data to $11.34 billion or up by 4.5 percent. The FDI in April was registered at a net value of $874 million and $2.4 billion for January-April period – both lower numbers compared to what was reported the same time in 2016.