Hot money outflow in May largest since 1999

 Economy
Jun 142013
 
Hot money outflow in May largest since 1999

MANILA, Philippines – Foreign portfolio investments slumped the most last month since 1999 after investors shied away from emerging markets on indications US stimulus measures will be scaled down. The Bangko Sentral ng Pilipinas (BSP) reported on Friday that portfolio placements— usually placed in the bond and stock markets— reversed to a net outflow of $640.84 million in May, the first for the year. A net outflow indicates more investments left the country than entered. The May tally was also the highest monthly outflow based on available records from the BSP website that dated back to 1999.  For the first five months though, portfolio investments— also called hot money for the ease they enter and exit economies— remained on the positive territory at $1.577 billion, up 74.4 percent from last year’s $904.16 million. The BSP expects hot money net inflow to reach $3 billion this year, although that amount may be revised next week. “The announcement of a possible scaling down of quantitative easing (QE) in the United States” drove investors to withdraw funds from emerging markets such as the Philippines last month, the BSP said in a statement. Business ( Article MRec ), pagematch: 1, sectionmatch: 1 As the United States economy showed signs of recovery, the US Federal Reserve has signaled last month that some of its members favor a “downward” adjustment to its QE, which involves the purchase of $85 billion worth of securities every month. The measure, instituted five years ago, was meant to flood the Read More …

Consumer confidence hits record high

 Economy
Jun 142013
 
Consumer confidence hits record high

MANILA, Philippines – Consumer confidence hit a record high this quarter as the country’s strong economic growth is expected to translate to more investments, hiring and higher salaries, the Bangko Sentral ng Pilipinas (BSP) reported on Friday. According to the results of the Consumer Expectations Survey, the over-all confidence index (CI) climbed to -5.7 percent for the next quarter from -11.2 percent in the previous three months. The current CI— although still negative— is the highest since the BSP survey began in the first quarter of 2007, central bank Assistant Governor Ma. Cyd Tuaño-Amador told reporters in a briefing. A negative result in the index indicates the pessimists outnumbered the optimists “although the margin between the two declined to its lowest ever,” she said. Rosabel Guerrero, director of the BSP’s department of economic statistics, attributed the result to “better job opportunities, increased investment inflows that would support job creation and salary increases.” “Consumers also cited the country’s strong macroeconomic fundamentals and the investment grade credit rating by Fitch Ratings as factors that contributed to their more bullish outlook,” she told reporters. Business ( Article MRec ), pagematch: 1, sectionmatch: 1 The local economy expanded by 7.8 percent in the first three months of the year, surpassing market expectations to become Asia’s fastest growing economy. This was achieved against the backdrop of slow three percent inflation. Slow inflation and a “stable” foreign exchange rate give consumers more purchasing power to spend for goods and services, in addition to public savings. Based Read More …

Key rates kept steady

 Economy
Jun 132013
 
Key rates kept steady

MANILA, Philippines – Policy rates were kept steady on Thursday by the Bangko Sentral ng Pilipinas (BSP) which said the economy remains in good footing despite the recent slump in the financial markets that highlighted funds leaving emerging markets. Key rates— which serve as banks’ benchmark on charging their loans— were maintained at 3.5 percent for overnight borrowing and 5.5 percent for overnight lending. Rates have been at that level since October last year.  At the same time, the BSP’s policymaking Monetary Board also retained the rate on special deposit accounts (SDA)— fixed-term deposits of banks and trust departments— at two percent, halting a series of cuts this year that started in January, March and April.  “The Monetary Board’s decision is based on its assessment that the inflation environment remains benign,” BSP Governor Amando Tetangco, Jr. told reporters in a briefing. “At the same time, domestic economic growth remains firm, driven by strong internal demand. Ample liquidity and strong bank lending should also continue to support economic activity,” he added. Inflation may settle at 3.1 percent this year, slower than the 3.2 percent projected by the central bank last April. For 2014, consumer prices may accelerate 3.6 percent, up from 3.4 percent originally. Business ( Article MRec ), pagematch: 1, sectionmatch: 1 The forecasts fell at the low-end of the BSP’s 3- to 5-percent target range for both years.  BSP Deputy Governor Diwa Guinigundo, in the same briefing, said lower oil prices in the world market are expected this year Read More …

BSP rediscounting loans down 12% to P16.6B in Jan-May

 Economy
Jun 122013
 
BSP rediscounting loans down 12% to P16.6B in Jan-May

MANILA, Philippines – Banks borrowed fewer funds from the Bangko Sentral ng Pilipinas (BSP) in the first five months, highlighting the healthy state of the local banking industry. Peso loans granted to banks under the central bank’s rediscount facility totaled P16.605 billion from January to May, 11.9 percent lower from the same period last year, data showed. Dollar credit, granted under the exporters dollar and yen rediscount facility, likewise dipped 6.8 percent to $61.5 million from $66 million a year ago. A total of 26 exporters benefited from the credit. No yen credit was extended during the period. The central bank’s rediscount window allows banks to borrow extra funds from the BSP charged with interest pegged against the BSP’s overnight borrowing rate. The current rate is at a record-low of 3.5 percent. The BSP has long highlighted the strength and health of the local banking industry, with sufficient capital and liquidity as well as enough provisioning against potential losses, to lend more. Business ( Article MRec ), pagematch: 1, sectionmatch: 1 According to latest BSP data, bank resources hit P8.229 trillion as of February, an increase of 9.09 percent from the previous year’s P7.544 trillion. The latest figure was also up from end-January’s P8.225 trillion. The rediscount facility, it has said, was meant to provide additional funding for banks to lend out to specific industries such as the export and agriculture sectors. Of the total peso credit lent until May, 86.6 percent went to commercial activities, while 2.1 percent went Read More …

Gov't keeps targets despite surprising first-quarter growth

 Economy
May 302013
 
Gov't keeps targets despite surprising first-quarter growth

MANILA, Philippines – Growth targets will be retained while inflation forecasts will be revisited, officials said, after the first-quarter economic expansion both surprising  policymakers and becoming the fastest in Asia for the period. Socioeconomic Planning Secretary Arsenio Balisacan said the Aquino administration is “sticking” to its six- to seven-percent growth target for the year “at the moment,” even after the uptick for the first three months registered way beyond at 7.8 percent. “We periodically review assumptions. We will consider first quarter performance when we meet,” Balisacan told reporters on Thursday after the data’s announcement. The Development Budget Coordinating Committee (DBCC), the body setting macro-economic targets, has yet to set a meeting to review its assumptions, but Budget Secretary Florencio Abad acknowledged growth would be sustained in the coming months. “We intend to sustain or surpass the very standards we set over the succeeding quarters,” said Abad, who is also DBCC chairman, in a statement. He did not elaborate. The 7.8-percent growth last quarter surpassed all growth rates in Asia, notably in China (7.7 percent), Indonesia (six percent), Thailand (5.3 percent), Vietnam (4.9 percent), Malaysia (4.1 percent), Japan (3.5 percent), South Korea (1.5 percent). Business ( Article MRec ), pagematch: 1, sectionmatch: 1 Strong consumption driven by election-spending, investments and government spending were tagged as the drivers for the growth, which was the fastest in three years. A stable inflation, averaging three percent as of March, was also noted. However, the Bangko Sentral ng Pilipinas (BSP) said there is need to Read More …

BSP ready to face withdrawal of stimulus measures abroad

 Economy
May 242013
 
BSP ready to face withdrawal of stimulus measures abroad

MANILA, Philippines – The Philippines stands ready to respond should the planned withdrawal of stimulus measures abroad results into capital outflows. “While there may be a possible effect of an exit strategy, I think investors will still look at the fundamentals, the prospects of individual countries. So it does not mean that suddenly they will just exit,” BSP Governor Amando Tetangco Jr. told reporters yesterday. Should it be necessary, the central bank “have the tools” to respond to possible inflow of capital to the US once it decides to scale down or stop its quantitative easing (QE) program. On Wednesday, US Federal Reserve chairman Ben Bernanke told a Senate inquiry that QE — which involves the buying of $85 billion worth of securities every month — is “providing benefits” to US economy still reeling from the effects of the 2007 financial crisis. While he warned against “premature tightening,” minutes of the meeting of the Federal Open Market Committee — the Fed’s policymaking body — showed that some members wanted to  “adjust the flow of purchases downward.” This has disgruntled Asian financial markets, causing investors to fly back to safe haven assets such as the dollar. The peso plunged to 41.69 versus the greenback on Thursday, its weakest level in almost eight months. Business ( Article MRec ), pagematch: 1, sectionmatch: 1 In the long run though, Tetangco said it should be expected that QE will stop as the US economy recovers and that Asian nations, such as the Philippines, should Read More …

Phl safe from asset bubbles – BSP

 Economy
May 052013
 
Phl safe from asset bubbles – BSP

MANILA, Philippines – Property loans granted for residential purposes rose the fastest among other household credit last year, but remained of the best quality, boosting the Bangko Sentral ng Pilipinas’ (BSP) belief that the country is still safe from asset bubbles. In its Status of Philippine Financial System Report released last Friday, the central bank said residential real estate loans increased 19.77 percent to P264.2 billion from P220.836 billion a year ago. This accounted for the biggest share in consumer loans, at 42 percent of the total P629.3 billion granted during the same period. Aggregate consumer loans went up 15.28 percent year-on-year. Other consumer loans were auto loans, credit card receivables and those used for other purposes such as purchase of appliances. All recorded gains from their 2011 levels. Despite the marked increase, residential property loans enjoyed the lowest bad loan ratio or the proportion of unpaid loans over the loan portfolio. Bad loans are those that remained unpaid 30 days after the due date. Unpaid credit accounted for 4.1 percent of total residential real estate loans, down from 4.3 percent in 2011. Business ( Article MRec ), pagematch: 1, sectionmatch: 1 Last week, BSP Governor Amando Tetangco Jr. said there are “no emerging signs” of asset bubble formation in the Philippines despite the affordability of bank credit and surge of inflows from abroad. Asset bubbles are characterized by an upshot in asset prices, such as those in the real estate sector, that they no longer reflect real market rates Read More …

BSP keeps policy rates steady

 Economy
Apr 252013
 
BSP keeps policy rates steady

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) kept its benchmark interest rate steady at a record low of 3.5 percent yesterday, while cutting the rate on special deposit account (SDA) by another 50 basis points to boost economic activity and contain the peso’s strength. Key policy rate was maintained at  its record  low of 3.5 percent for overnight borrowing and 5.5 percent for overnight lending, but SDA rates were cut by 50 basis points to two percent  across all tenors. The cut was “effective immediately,” BSP Deputy Governor and officer-in-charge Nestor Espenilla Jr. said. The central bank has eased rules on foreign exchange transactions to spur dollar buying and contain the peso’s strength as it expects more capital inflows after the country’s first-ever promotion to investment grade status in March, and with other rating agencies seen following suit later in the year or next year. SDAs are fixed-term deposits of banks and their trust departments with the central bank with maturities of one week, two weeks and one month. This was the third time SDA rates were cut, following reductions of 50 basis points each in January and March.  “The Monetary Board’s decision to maintain the policy interest rates at their current levels is based on its assessment that the inflation environment is likely to remain manageable,” Espenilla told reporters. Business ( Article MRec ), pagematch: 1, sectionmatch: 1 Inflation is seen to settle at 3.2 percent this year, slightly lower than the 3.3 percent forecast in March Read More …

BSP keeps policy rates, cuts SDA rates anew

 Economy
Apr 252013
 
BSP keeps policy rates, cuts SDA rates anew

MANILA, Philippines – Policy rates were kept steady on Thursday but interest charged on special deposit accounts (SDA) was slashed anew as the Bangko Sentral ng Pilipinas (BSP) looks at pushing out credit to finance economic activity. Key rates were maintained at their record-lows of 3.5 percent for overnight borrowing and 5.5 percent for overnight lending, but SDA rates were cut by 50 basis points to 2 percent, across all tenors. The cut is “effectively immediately,” BSP Deputy Governor and officer-in-charge Nestor Espenilla, Jr. said. SDA are fixed-term deposits of banks and their trust departments with the central bank with maturities of one week, two weeks and one month. This was the third time SDA rates were cut, following reductions of 50 basis points each in January and March.  “The Monetary Board’s decision to maintain the policy interest rates at their current levels is based on its assessment that the inflation environment is likely to remain manageable,” Espenilla told reporters. Business ( Article MRec ), pagematch: 1, sectionmatch: 1 Inflation is seen to settle at 3.2 percent this year, slightly lower than the 3.3 percent forecast in March “due to lower oil prices,” BSP Deputy Governor Diwa Guinigundo said in a briefing. For next year, consumer prices would likely rise 3.4 percent, up from 3.3 percent, on expectations of higher electricity prices, he added. Both forecasts fell within the BSP’s 3- to 5-percent target range. The benign inflation outlook, Espenilla said, gives space to the central bank to allow more Read More …

BSP eases foreign exchange rules anew

 Economy
Apr 182013
 
BSP eases foreign exchange rules anew

MANILA, Philippines – Foreign exchange (FX) rules were relaxed anew on Thursday in a bid to ease business transactions and encourage outflow of dollars amid a strengthening peso. The Bangko Sentral ng Pilipinas (BSP) unveiled new foreign exchange liberalization measures “to keep policies responsive to current economic conditions,” Deputy Governor Nestor Espenilla Jr. said. “The new rules aim to further simplify FX transactions of the general public with banks,” Espenilla told reporters in a briefing. Patria Angeles, director of BSP international operations department, said the measures may “ease pressure” on the peso, which was Asia’s second best performer versus the greenback last year. The peso closed three centavos stronger at 40.22 to a dollar Thursday. Under the new regulations, foreign money allowed to be purchased by residents without the need for BSP approval was doubled to $120,000 from $60,000. Espenilla said this is to cover “rising costs” in studying abroad, medical bills, or travelling. In the same manner, foreigners and balikbayans departing the country may now exchange their remaining pesos up to $10,000 or the equivalent amount in other currencies. The original cap to avoid BSP clearance was set at $5,000. Business ( Article MRec ), pagematch: 1, sectionmatch: 1 Expatriates and foreign students living in the Philippines may now also open peso bank accounts using their earnings here. “Previously, opening of bank accounts for non-residents may only be done by exchanging your foreign money to pesos and then using that pesos to open the account,” said BSP managing director Read More …

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