MANILA, Philippines – The country’s balance of payments position swung to a deficit in March following a recovery in February, the Bangko Sentral ng Pilipinas reported yesterday.
“The BOP deficit for March was largely due to foreign-currency debt repayments of the National Government and BSP’s foreign-exchange operations,” BSP Governor Amando M. Tetangco Jr. said in a text message to reporters.
The deficit stood at $336 million in March, a turnaround from the $452-million surplus recorded in the same month last year. The latest figure was also a reversal of the $345-million surplus recorded in February.
The BOP shows a summary of a country’s transactions with the rest of the world. A deficit in the BOP cuts the country’s foreign exchange reserve, which serves as a cushion against external shocks.
The March level brought the first-quarter BOP deficit to $4.471 billion, a reversal of the $1.537-billion surplus in the same period last year.
“The cumulative deficit for the first quarter stemmed principally from net outflows in foreign portfolio investments in market reaction to uncertainty over the pace of tapering of the Fed’s quantitative easing measures,” Tetangco said.
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He added that a higher balance of trade deficit also contributed to the BOP deficit during the quarter.
The US Federal Reserve in January has started scaling back its monthly massive asset purchases following positive US economic data. This has caused volatility in global financial markets because when fully taken out will result in higher interest rates.
Emerging markets including the Philippines has seen capital outflows as a result of heightened volatility in markets.
“The foreign exchange outflows have been reflected in the depreciation of the peso, particularly in the latter half of March. Since then, however, the peso has recovered, as flows have begun to return to the domestic market,” Tetangco said.
